ARDILYA FOR DEVELOPMENT LUZON, PHILIPPINES

Empowering as many families as possible while ensuring the future of assets

Phase 1 public report

APRIL 22, 2015 ARDILYADEV

By Adrian Alcario Nagel

1

Words we try to live by:

“Give a man a fish and you feed him for a day,

teach a man to fish and you feed him for a

lifetime.”

–Anne Isabella Ritchie around 18901

1 http://www.phrases.org.uk/meanings/give-a-man-a-fish.html

2

Thank you,

To my mother and father, Susan and Beat Nagel, who trusted me

enough to lead this project.

To Melody Alcario Dolosa, the initiator of this project, and my cousin,

without whom nothing would have been possible.

To all my other cousins, uncles and aunts, especially Merlita Dolosa

Torres and Joy Dolosa Peñaflorida for their involvement, time and

encouragements.

To all those who accepted our help, believing we could bring a

change to their lives.

To all those who, by near or by far, helped or supported our quest.

–Adrian Alcario Nagel, project manager at Ardilyadev.

3

Contents Introduction ................................................................................................................................. 5

For a better understanding ............................................................................................................ 7

Location.................................................................................................................................... 7

The Filipino economy................................................................................................................. 8

Figures and statements .......................................................................................................... 8

The situation as observed ...................................................................................................... 9

Who finances and why..............................................................................................................10

The Filipinos .............................................................................................................................12

Alcario family ...........................................................................................................................13

Situation before the start of the project.....................................................................................14

The team involved ....................................................................................................................15

Project description .......................................................................................................................18

The 3 phases ............................................................................................................................18

Methodology ...........................................................................................................................19

Project management ................................................................................................................22

Phase 1, what has been done? ......................................................................................................24

Work on the properties ............................................................................................................24

Santa Rosa ...........................................................................................................................24

2 new houses .......................................................................................................................28

Sorsogon ..............................................................................................................................30

Families/beneficiaries ...............................................................................................................33

Financial overview of phase 1....................................................................................................41

Budget and exchange rate calculation ....................................................................................42

Help to families ....................................................................................................................44

Real estate investments ........................................................................................................47

Extra costs (public) ...............................................................................................................49

Financial overview conclusion ...............................................................................................51

What is coming in 2015 ................................................................................................................52

Phase 2 has already started.......................................................................................................52

Description...........................................................................................................................52

Forecast schedule .................................................................................................................54

Financial ..............................................................................................................................54

Phase 3 is being prepared .........................................................................................................55

Description...........................................................................................................................55

Forecast schedule .................................................................................................................56

4

Financial forecast..................................................................................................................56

Ameliorations and recommendations............................................................................................57

Exchange rate.......................................................................................................................57

Leasing and rent ...................................................................................................................57

Project management ............................................................................................................57

Estate appraisal ....................................................................................................................58

Semestrial visits ....................................................................................................................58

Reinvesting for more profits ..................................................................................................59

Masterhouse ........................................................................................................................59

Empty units ..........................................................................................................................60

Sorsogon ..............................................................................................................................60

Conclusion ...................................................................................................................................61

Please note that 2 appendixes were joint to the private report and will remain confidential:

Property, vehicle and family sheets;

Farm, Santa Rosa Appraisal.

Report changed from private version written in November 2014, during the last days of phase 1. This

version isn’t an updated one but intended for the public.

This report is mainly descriptive of the teams’ work during Phase 1 of the project, from June to

November 2014.

Because it is managed internally, financial information has been deleted and, in order to protect

privacy, beneficiary names have been changed for this version.

5

Introduction 2014, 100 years since the beginning of the First World War. It was already called “World War”. The

word “world” seemed like the biggest scale any man could ever imagine. A century later, we could

argue that Malthus was right as the world seems too small for all people living on it. With the fall of

the Berlin wall in 1989, capitalism beat communism with the ideology that « trade, industry, and

the means of production are largely or entirely privately owned and operated for profit »2, and a «

central characteristics of capitalism include capital accumulation, competitive markets and wage

labor »3. In other words, the owner controls profits and wages. With a lot of virtues we aren’t going to

enumerate here, it also led to some pervert consequences, and especially, growing inequalities and

development level gaps between continents, countries or citizens of a same country. This is where the

state or government is supposed to step in and reduce inequalities with redistribution and correct

issues the free market can’t solve by itself. Some countries found the right balance between free

market and state intervention, others are still struggling.

The Filipino economy is growing but remains a developing one that knows poverty in all its forms:

hunger, lack of health care, lack of education, squatters or pollution are some of the issues for the

archipelago.

Our group, which we called Ardilyadev, inspired by the Filipino word “ardilya” for squirrel, the symbolic

animal for savings, works towards empowering the family members of a Filipina that had the chance

to move to one of the richest countries in the world: Switzerland (9th in GDP per capita according to

the IMF and the world bank in 20134).

However, it did not start with us, for almost 3 decades, she and her husband invested in real estate

and in people. Unfortunately, it didn’t always lead to what was expected and people kept on being

dependent on any help that could be given to them.

2 http://www.oxforddictionaries.com/definition/english/capitalism 3 http://www.dictionaryofeconomics.com/article?id=pde2008_C000053 4 http://data.worldbank.org/ http://www.imf.org/

6

Ardilyadev stepped in with the idea of changing the method and trying means inspired by years of

study in the developing countries economics field and in real estate in developed countries.

We are now at a turn on our road towards full empowerment. 6 months have passed since the project

started with the goal being “empowering as many families as possible while ensuring the future

of assets”. We hereby ask ourselves: Which means used were efficient and show good signs?

What can be changed and improved?

This report will look back at what has been done and describe the ideology behind the decisions that

have been made. This, in order for the group to improve itself and maybe find new ways to optimize

the help that has been given.

This report, mainly descriptive, will be divided into three main sections. The first one seeking to

describe the project and the environment it has evolved with. The second will focus on what has been

done these last 6 months. The third and final section will have a look on the future and the two phases

left before completion of the project.

7

For a better understanding Before describing the project itself, let’s have a look at the environment in which the project has

evolved.

Location The project is held on the Island of Luzon, in red on the following map of the Philippines, with two main

area of action, in yellow, Laguna region with the city of Santa Rosa where most of beneficiaries live,

and in green, Sorsogon region with Sorsogon city.

Laguna region is a mainly industrial area that is gaining influence thank to the expansion of the capital,

Manila. Santa Rosa, and the neighbor city Cabuyao, are in an area where big companies such as Coca-

Cola (USA), Toyota (Japan), Nestlé (Switzerland) or Yakult (Japan) chose to put up their factories. It is a

very dynamic area, with a lot of jobs and with constantly rising estate prices.

Sorsogon, south of the Bicol region, birth place of the Alcario family, is a much more rural area of the

Island. Farming and livestock breeding are still the main source of income in this region. However, it

seems some industries are having an eye on the area as some companies are starting to implant

factories there such as Coconut Juice producers.

8

The Filipino economy Most figures and statements here are taken from another paper written in French by the author of this

report called “Country risk and exchange rate risk, a case on the Philippines”, from march 20135.

Sources and references can be found in that same document and are mainly from the IMF, World Bank,

CIA world fact book and other international institutions such as the United Nations or Amnesty

International.

Figures and statements “When the Philippines became independent in 1946, it was the most developed country in Asia, today,

it is an intermediary ranked country when you compare GDP per capita rates: 4419$ for the Philippines,

compared to 3627$ for India and 8400$ for China. This figure makes it a new industrialized country and

is called a baby tiger of Asia. However, these international rankings hide another truth, 26,9% of its 100

million citizens are under the national poverty rate, a figure that hasn’t changed since 10 years, the

government’s effort being neutralized by the huge demographic expansion. Still, the country attracts

big international companies and was ranked 65th on the global competitiveness index published by the

world economic forum in 2012-2013, 10 ranks better than the previous period.

It is a founding member of the ASEAN alliance in 1967, and its international relations are generally

positive, even with an arising territorial conflict with China. Considered in 1946 as the country with

most potential because of its highly educated people (compared to its neighbors), it kept good relations

with its former colonist, the United States and the last American military base closed in 1992 only. Even

with all these assets, the country wasn’t able to grow its economy. The Asian crisis of 1997 hit strong

the Philippines, and even if the country resisted well to the subprime crisis and the following European

crisis, it is still less developed than the Asian Giants, India and China. However, better days seem to be

coming.

The Philippines are a democracy inspired by the American’s. The president is elected directly by the

people for 6 years. The current president is Benigno Aquino III and was elected on june 30th, 2010.”

The paper concludes with the following statements about the different risks levels the country is

facing:

“Outside relations are good and the service industry is very dynamic with call centers that took the first

place from India in 2012.

5 http://fr.scribd.com/doc/134638724/Etude-Du-Risque-Pays-cas-Des-Philippines

9

Economic indicators are progressing in the right way and the GDP is sustained by transfers from

Filipinos abroad (OFW) that send money back to their families.

The level of debt is improving and is about to go under the 50% line and notation agencies such as

standard and Poor’s are one grade away from grading it as a non-speculative investment, which would

be a very good news for the local economy as some investors such as American hedge funds would be

therefore allowed to invest in the Philippines. This would consequently see a huge flow of FDIs go inside

the Philippines.

However, the Filipino democracy is still precarious with high levels of corruption (even if it is improving),

armed conflicts and poor redistribution of income. There is currently a stable power in place, but these

issues must be dealt with to insure a lasting stability.

The banking system is formed of huge conglomerates, mostly owned by a single family, therefore, if

one fails it might make the entire banking system collapse.

Infrastructure investments are very poor and hinder the country’s development. However, real estate

investments should be monitored as the price of land and property is rising too fast, there are several

signs of a bubble, which if it explodes, might pull the entire economy down with it.”

Finally, the market potential of the Philippines is very big (100 million people) and must be watched.

The situation as observed To the above figures and economic analysis, we can add our own observations and experience. The

statements here are made for the lower class of the population of Santa Rosa and Sorsogon city we

worked with.

First, their access to health care is good, provided they have enough funds. But a government program

called “Phil health” allows families with low income to have access to medical facilities for a lower

price. There are some free medication programs and generic drugs. There also are free surgery

programs that are mobile in the areas close to Manila. But accessing these is hindered by the cost of

transportation. Often, lower class families prefer to live with their health issues rather than spend their

money on getting healed.

Public education is virtually free, however, school materials and uniforms are at the parent’s costs, and

if they are not careful, some teacher or even public schools, might abuse the parents financially. These

costs only can be a big investments for low income families, especially those with a lot of children.

However, there are some programs for high scoring students. The entrance into private schools (with

an overall better level of teaching) can be accessible and paid by a governmental program for students

10

that get good entrance scores. Until 2015, college starts at 15-16 years old and Filipino degrees are

rarely as recognized as others on an international level.

Unemployment is officially around 7% in the Philippines, however, in the facts, most people we were

involved with didn’t have a good access to job offers and tend to find temporary positions with low

salaries. Here, wages range from 270P per day for a helper (not skilled) worker, to 500P for skilled

workers, in construction and renovations business. Legally, there is a limit on daily number of hours of

work, but aren’t always respected, and workers won’t take the risk to complain or demand their extra

hours to be paid, by fear of losing their hardly found precarious position.

Most families will depend on the income of one parent, rarely both as the wives stay home to take

care of the children. When of age, children choose to work to help their parents rather than study

longer.

Finally, the access to banking schemes is highly hindered by their low wages and high interest rates. A

governmental institution, the Pag-ibig, gives house ownership access to low income workers by

insuring their loans, taking the said house as collateral. This system is extremely risky and feeds the

bubble we mentioned in the previous paragraph. The entire weight of risk is transferred from realtors

to this governmental institution (paid with citizens’ taxes), feeding the increase of price as demand

grows and developer building extensively (but not as fast as the demand grows), not fearing their

potential buyers can’t pay in the future. Note also that most of these loans have monthly amortizations

that are lower than the renting price an owner could ask for from a lessee. Leading any potential renter

from renting to owning agreements, pulling therefore renting prices down as demand falls, and making

owning for renting almost not profitable anymore.

Who finances and why As we saw above, the Filipino economy is still in developing phase and the lower the class the people

are from, the harder it is for them to find means towards empowerment.

The financers of this project are Susan and Beat Nagel. She was born a Filipina, him a Swiss. But starting

a life together did not lead them to turn their backs on the rest of the family that stayed in the

Philippines. For decades, they invested, sent money for health care or education, hoping it would be

the push that would allow beneficiaries to turn around their lives. Success but also failure was on their

path. In time, tired and upset, the couple started to lose hope into seeing them change their lives. But

hope was not dead yet, that is why they decided to entrust their last hope into turning around faith to

Ardilyadev, initiated by their niece and led by their only son.

11

After 30 years of help, particularly into housing and giving their family better living conditions, they

were hoping help associated to hard work from all family members would suffice to put their lives on

the right tracks. Cultural gap and lack of communication has led to a situation where a lot of

misunderstanding took place. They shifted their help towards more empowerment, particularly

towards education while always being there to help for health care issues. However, disappointments

were still on the way as some beneficiaries seemed not to understand what was really at stake, made

what can be seen as wrong life choices (early pregnancy, dropping out of college or training…) and

spent their time and money on issues that would seem vain to the Nagel couple (gambling, drinking…).

The couple started losing interest into anything they were trying to create in the country for their

family. With nothing and no one to back them, the Filipinos, especially the poorest, didn’t take more

interest into maintaining the houses and lots they were provided with, leading to a dangerous

situations with decayed ceilings, roofs and walls where some would rather live outside.

For example, those living on the rice field in Santa Rosa city, which still belongs to the backers, were

flooded every time it rained, particularly during rainy season. Other family members were striving with

healthcare issues they couldn’t afford because of low salaries that they couldn’t increase because of

their lack of education. Without falling into extreme poverty, most managed to maintain their living

conditions, however, a group

of nephews and nieces, ended

in the squatters in Las Piñas

above a filthy river (see

picture). Some were and still

are depending on allowances

provided by the backers.

The new generation, inspired

by those who chose to listen to

their aunt in the first place,

start to value hard work and try to educate their own children in that way. However, the economic

situation most of them ended up being in (healthcare costs, regular unemployment, education costs,

and number of children) is a brake on their will and puts weight on those who were more successful

and want to help.

That is why, after 13 years of loyal help and management for her aunt Susan, Melody Dolosa decided

to take a leap and attract her cousin’s attention on the issues she was in charge of, initiating the first

step towards this project.

12

The Filipinos Here are a few traits the Filipinos share according to the team after 6 months of work. We think this

point has to be made for more understanding of the issues we faced. We aren’t social or cultural

experts so these are only words built out of experience, but what we will expose here is intended to

help towards filling any cultural and social gap that can arise during this kind of project in the

Philippines. Please note that a cultural gap is considered here to be between two cultures or more

coming from two countries or more, whereas a social gap is here considered as being between two or

more layers of a population, the most common one being the gap between the rich, the middle and

the working classes.

The Philippines are an ancient American colony (1898-1946), and even 68 years after independence,

colonialism seem still strong in the attitudes of Filipinos who sometimes blindly listen and follow the

“white man’s” opinion or order. This can be interpreted as kindness which it is in most cases. However

considered helpful in many cases, it can also be hindering when it comes to sharing and trying to

understand their feelings and thoughts. Some discussions become monologues as they would simply

nod and not share their opinion. A misleading trait that puts more pressure on decision making when

they finally speak up and consequently question the program they have entered.

Because of decades of promises of change with no actual evolution, Filipinos’ mistrust towards the

government and the system is strong. Raising therefore insecurities (enhanced by the lack of

education), it is also hard to convince them to follow our helping program or take part into the

healthcare program put in place by the government called “Philhealth”. One step at a time, raising

hope and with a lot of explanations, sometimes pushing them gently, most families accepted in time.

Still, one family refused to follow our program. But after being inspired by the success of others in our

program, they sought to be integrated, which should happen in phase 3 (more on phases of the project

later).

The last trait we want to mention here is the lack of trust between Filipinos. This is not only between

high and low class citizen where resentment can be felt in some discussions, but also between citizens

of the same social ladder. In other words, most team members being raised and bred in the Philippines,

some beneficiaries would question their motives and refuse to communicate without intervention of

the project manager, considered here as a foreigner.

13

Alcario family The project is focused on only one family (with an exception made for Sister Daniella, not related by

blood). What we call the Alcario family are all the 11 siblings of Susan Alcario Nagel, and their

descendants. She counts 39 nephews and nieces, most of baring children age. Some with already up

to 7 children.

With no gender discrimination, married women, not baring the Alcario name, and their children, have

been naturally included.

The choice of first beneficiaries has been made upon arbitrary judgment, depending on number of

children, living conditions and urgency of needs. Other family members will not be ignored, but bound

by budget, allocations had to be done. Phase 3 will include those that we had to have wait.

Please note that in 2009, the OECD ranked the Philippines 7th,

on its Social Institutions and Gender Index (SIGI), making it one

of the countries where discrimination towards women is the

lowest. It scored 0.00788 (best being 0, scale until 1), in

comparison, the 102nd ranked country, Sudan, scored 0.67781.

The Social Institutions and Gender Index, OECD, 2009

14

Situation before the start of the project This project started on May 28th, 2014. However, the very first investment done goes back to 1987, on

a ricefield in Santa Rosa.

Since 1987, several other investment have been done, here is a chronological view of the past 3

decades:

All these purchases have been done to ensure good living

conditions for the siblings.

One of the main moments was in 1995 when half of the

farm bought in 1987 could be sold. The money was then

used for purchasing houses and lots in 1995 and 1996 for

the family members to live into. It has also been used as

allowance to allow nieces to have access to a higher

education.

In 2008, in need, a nephew asked for help and was

brought back to Sorsogon and a house was bought for him

and his children. This operation was a failure as he decided

on his own to go back to Santa Rosa, where he felt there

were more opportunities.

In 2009, another house was bought in Cabuyao, Laguna, in

order to help a nephew. Here again, in the last moment

they decided to refuse the help. Another niece accepted

the help and started living in the one unit house.

In 2013, a lot was bought to have Sister Daniella move into. This project has been fulfilled by

Ardilyadev. More about her in the next section.

1987

•Rice field bought•Santa Rosa

1995

•Sold 1/2 rice field•Santa Rosa

1995-1996

•Houses and lots bought•College allowances

•Santa Rosa and Sorsogon city

2008

•House bought•Sorsogon city

2009

•House bought•Cabuyao

2013

•Squatter's lot bought•Santa Rosa

15

The team involved

The main actors:

Adrian Alcario Nagel, son to the project backers, is the project manager and creator of Ardilyadev.

His roles include, but weren’t limited to:

Project management

o Planning,

o Local coordination,

o Communication with the mission giver based

in Switzerland,

o Logistics,

o Basic legal aspects,

o Reporting.

Budget management

o Allocation,

o Negotiations,

o Search of best offers.

People relocation

o Transport,

o Living conditions,

o Housing,

o Employment.

Construction site supervision.

Small business advisor.

Website creation and management: http://www.ardilyadev.com.

E-reputation and social medias.

16

Melody Alcario Dolosa, cousin to the project manager, is the local expert and legal advisor. She is the

initiator of the entire project by contacting the project manager and convincing him of the need to

intervene.

Her roles include, but weren’t limited to:

Assisting the project manager.

Translation from Filipino to English (and vis-versa).

Legal papers both in English and in Filipino

o Leasing contracts,

o Acknowledgments,

o Loan contracts and

o Deeds of sale.

Local networking.

They were largely helped by two others:

Marjorie Dolosa Peñaflorida, cousin of the project manager, is a real estate

executive. She mainly helps us find and deal with potential sellers, buyers and

renters.

Her roles include, but aren’t limited to:

Local networking in the real estate sector.

Communication intermediary with potential sellers.

Administrating and processing buying documents (titles, taxes…)

17

Merlita Dolosa Torres, cousin of the project manager, is a real estate executive. As an addition to her

sister Marjorie, she mainly helps towards improvements and renovation issues, as well as dealing with

guidance for beneficiaries. Please note that she became a beneficiary herself.

Her roles include, but are not limited to:

Local networking with inhabitants of areas of investments.

Communication intermediary with potential sellers.

Administrating and processing buying documents (titles, taxes…).

Guidance of beneficiaries towards their potential income and

budget management.

Accompanying of beneficiaries (buying of goods, paper

processing…).

Please note that her husband, Carlos Torres Junior, serves as driver

of the car we bought for the project and has accompanied her on different missions.

A last member will join the team shortly:

Alyssa Dolosa Torres, daughter of Merlita, will be the real estate follow up executive. She will be the

representative of the project manager during his absence and make

sure beneficiaries respect their contracts and report any problem so

they can be dealt with effectively.

Her roles will include but not be limited to:

Collecting rent and loan amortizations.

Report back to the project manager.

Inspect the condition of the different estates.

18

Project description There are two main issues that have to be balanced:

Helping durably a set of beneficiaries chosen from the family of the project backer. Meaning

not only an initial help is given, but a follow up has to be undertaken regularly in order to

intervene quickly and minimize the impact of a possible problem.

Ensure the capacity of the backers to finance future help. Their assets, almost exclusively real

estate ownership, must be profitable in a higher degree than the help they offer. This leading

to two strategies working hand in hand: either reducing the help by ensuring beneficiaries will,

in the future, have the capacity to help themselves; and improving income from their

belongings (rent or capital gain mainly).

Therefore the motto is: “empowering as many families as possible while ensuring the future of assets.”

In order to answer this double issue, a source of income, or potential source, had to be found. The

choice has been made towards a rice field in Santa Rosa, ideally situated between an SM mall (one of

the biggest mall company in the Philippines) and the future city sports complex (to be inaugurated in

2015). No more extensively used by the family members, and living conditions being unbearable in

rainy season, it had to be repurposed. Financially incapable to develop the land on their own, owners

decided to find a third party to intervene.

The 3 phases As evoked in the introduction, in order to fulfill this objective and for a scheduling purpose, the project

has been divided into 3 phases.

With Alcario family members still living on the rice field (6 families including sister Daniella), and

potential investors not whiling to leave a crunch of the land undeveloped, a new home had to be found

for all of them. This arose some issues as some had been there for their entire lives. However, all were

and still are very cooperative.

First phase, was about relocating some of the people living on the rice field while ensuring their income

opportunities. However, the estate and family members weren’t limited to the rice field, and in order

to optimize their relocations, and in order to “empower as many families as possible”, other family

members got included in the relocation plan. To extending the estate, improving living conditions and

ensuring their incomes being a major tool to empowering them, already owned units had to be

renovated and improved. This, in the same time, answering the “ensuring the future of assets” issue.

As income of belongings in the Philippines is still too meager, this phase had to be backed by money

transfers.

19

Second phase, will, contrary to phase 1, mainly focus on the second issue of our goal: improving the

income from the backers’ belongings. As said, work will mainly concentrate on the rice field and finding

an investor that will accordingly remunerate the owners. A secondary income possibility is the selling

of a unit. In the eventuality that a buyer is found, phase 3 will consequently be started earlier. This

phase is key as it searched to suppress foreign currency transfer backings and creates a self-sufficient

system within the Philippines.

Third phase is an extension of phase 1, once an investor will have been found for the rice field, families

that weren’t included during the first 6 months will, before end of phase 2, be prepared to move out

of the land and be provided for, comparably to what has been done during phase 1. Here again, other

family members will be included.

More on these phases in the next section.

Methodology The project based on helping as much as possible while sustaining assets as well as possible, has three

fundamental pillars: charitable help, micro-financing and investing. The aim is to balance charitable

help, micro-financing and return on investments and create a virtuous and profitable circle, so we

can extend our help to other issues in the future.

Charitable help was and will be chosen for families or individuals as a first step towards empowering

them. Most didn’t own anything, weren’t enough educated, or just didn’t have access to any potential

income. They often rely on the income of one parent only. One of our core ideas is too make sure that

both parents can have an income. As most husbands have a job (even on an irregular basis), we mostly

focused on what women could do from at home, while taking care of the children.

According to Investopedia:

DEFINITION OF 'MICROFINANCE'

A type of banking service that is provided to unemployed or low-income

individuals or groups who would otherwise have no other means of gaining

financial services. Ultimately, the goal of microfinance is to give low income

people an opportunity to become self-sufficient by providing a means of

saving money, borrowing money and insurance.

http://www.investopedia.com/terms/m/microfinance.asp

20

Once the “first kick” has been given, we focused on extending our help with micro -financing schemes

in order to replace the inaccessible banking system, with loans that don’t include any interest rates

(unless the loan agreement is repeatedly broken) and with monthly amortizations.

Charitable help and micro-financing schemes finance the same kind of ideas that range from, but are

not limited to, simple training allowances, to Sari Sari (local mini convenience stores) starting capital,

foot spa materials or sewing machine with basic materials. Each personal project can be different and

we make sure success rates are good enough, depending on education of demanding beneficiary and

the market it will be held in.

Finally, in order to compensate for any cost not part of a micro-financing scheme, we opted for

investing in land and houses and apply lower than market renting rates.

The investments can mainly take three forms:

Buying lots and/or house at interesting prices;

Renovating or rejuvenating old units;

Improving living conditions within a unit (water pump, electricity, dirty water system…) ,

increasing therefore the overall value of a unit.

Our returns investments should compensate for:

Project management costs;

Renovations and improvements on current belongings rented by family members;

Currency exchange rate losses and fees;

Inflation;

As well as for the charitable help;

INVESTOPEDIA EXPLAINS 'MICROFINANCE'

Microfinancing is not a new concept. Small microcredit operations have existed since

the mid 1700s. Although most modern microfinance institutions operate in

developing countries, the rate of payment default for loans is surprisingly low - more

than 90% of loans are repaid.

Like conventional banking operations, microfinance institutions must charge their

lenders interests on loans. While these interest rates are generally lower than those

offered by normal banks, some opponents of this concept condemn microfinance

operations for making profits off of the poor.

The World Bank estimates that there are more than 500 million people who have

directly or indirectly benefited from microfinance-related operations.

21

Any loss due to the risk this project involves (natural disaster, health care needs of

beneficiaries, beneficiary business failure, rupture of lease or loan agreement).

Return on investment can be from:

Capital gain on selling price compared to buying price plus renovations (long term investment);

Housing rent;

Commercial rent;

Industrial rent.

In order to ensure good understanding and compliance from the beneficiaries, they are legally bound

with different documents such as:

Acknowledgement of charitable help listing what has been given to them and therefore

become their belongings;

Loan agreements when a micro-financing scheme has been put in place;

A renting lease for the unit they occupy and for any vehicle they have been lent. These are

signed even if no rent has been applied to them and their families as it contains also ground

rules for maintenance and respect of premises.

The key for this method is balance, and each case is particular, depending on financial and mental

capabilities of each one.

To these three levers of empowerment, we must add an important part of our work that is often

forgotten, and that is, the following up process. Therefore, we decided to trust the new generation

and test their capability of taking responsibilities. Follow up sheets have been created and will be filled

out by our representative. She will be in charge of collecting amortizations and rent as well as sending

reports on business progress of beneficiaries and the status of the capital we lent them. She will make

a monthly report and deposit the money on an account that can be monitored on the internet. When

we consider empowerment is successful, we will slowly reduce our business monitoring until they are

fully independent. We do not expect this to be possible before several years of monitoring, but here

again, each beneficiary is different.

22

Project management In this paragraph, for more understanding on how we applied our methods on the field, we will

summarize some of the issues we had to deal with.

The very first issue, and probably most important one, pertains to banking and money transfers. Real

estate is the least liquid kind of investment, therefore money had to be transferred from Switzerland

and had to be as accessible as possible in the fastest way while minimizing costs. The Philippines is on

the international grey list of tax havens, and the opacity can be felt when applying for a bank account

and when money is transferred. Application is simple, requiring local IDs and proof of billing for address

(a different name can be used). Money transfers, in our case, went through the United States before

coming to the Philippines, adding an intermediary, but also cost. No fees per say were applied, but

exchange rates were not in our favor, which cost 3% of the total transfers. Transfers between banks

are made in cash and aren’t questioned, this is where opacity becomes maximal and money becomes

untraceable. With big expenses to be done, either cash or manager checks can be used. Transfers

between banks aren’t commonly used and mostly impossible. ATM withdrawals are limited to 40 000P

per day, which is higher than in France for example. We chose to make all our payments in cash (we

tried managers’ check once). Too risky to transport big amounts around, cash was withdrew when

needed, except on weekends when banks were closed. Here and in other cases, for security reasons,

fortunately the project manager is half Filipino and started to blend in after a few weeks in the sun.

Transportation in the Philippines, compared to other Asian countries, is quit cheap with tricycle fare

for 9PHP per ride and Jeepney fare for 8,5PHP per ride. One of our beneficiaries being a tricycle driver,

we called him and compensated him when a lot of stops had to be made in a same day. A bus trip to

Manila from Santa Rosa (1h30) cost about 60P. However, when the drive is far and we had to pay for

several people, we chose otherwise.

Transportation to Sorsogon had to be done by car or by bus. The number of people participating into

the trip could go up to 8 persons with luggage and more for moving families to their new place of living.

Either a bus (Min 1600 PHP/Person back and forth) or renting a car (16000 PHP at the very least,

including gas and driver) were the only options as there are no train on that part of the Island of Luzon

and planes wouldn’t allow any on way stops to leave some beneficiaries in their new homes, not

mentioning the cost of such an operation. Therefore the idea of buying a car was pushed forward in

order to cut expenses and have us pay for the driver and the gas only (10 000PHP in average per trip).

The team has been expanded in order to transfer responsibilities from the manager and his advisor to

field agents, our real estate executives. This is also a way to make some beneficiaries more responsible

23

and make them aware. Including them allowed us to expand our understanding of local needs and

procedures that can be applied.

Capitalizing information was a big issue, especially in the beginning of the project where many

beneficiaries manifested themselves and tried to tell us their stories and needs. No system had been

put in place yet as classic management tools are hard (sometimes impossible) to apply in a developing

country. Scheduling is almost impossible as being late is common and some issues arise and must be

dealt with in a few hours. The team mainly used software such as Microsoft excel or words to collect

and process accounting data. A weekly report was put in place at first, but lack of time and capable

team members made it impossible. Same for website management that we tried to maintain on a

monthly basis. Ideally one extra team member with software and field experience should have been

hired as no family members had time or experience enough for such a task.

Communication with beneficiaries was made through phones, internet chatting and meetings, with

one team member translating for the manager. However, social and cultural gap could sometimes

become an issue and lead to misunderstanding.

Communication with backers was held almost exclusively through video conferences, an international

line was used in case of emergency.

Most of team members were remunerated with

A commission (lower than official rate) for being the agent on house buying process;

300P/day, an average local salary rate, for canvassing renovation materials, driving or

networking;

The local advisor, Melody Dolosa, wasn’t remunerated per say, but all her living costs where

paid for, and she was rewarded with a one month vacation in Switzerland for Christmas and

New Year.

24

Phase 1, what has been done? This report concludes the first phase that lasted from May 28th to November 30th, 2014.

Work on the properties Here will be enumerated all renovations, improvements and investment done on each one of the real

estate belongings. This section answers the part of our goal on ensuring the future of assets. All

figures and sensitive information have been deleted for this public version.

Santa Rosa Most operations took place in the area of Santa Rosa where most family members live.

Farm, Santa Rosa, Laguna

2,7h rice field with 2 houses, 1

chapel purchased in 1987.

The team is currently looking for a

potential renter for this land. A

renter that would not only rent but

also develop as extensively as

possible the said land. More on this

in the section on phase 2.

Currently, after phase 1, 2000m²

(out of 27 000m²) of the land is

being used by 3 families as their place of living and garden where they planted vegetables.

During phase 1, 3 families have been relocated but no renovations or improvements have been

undertaken as the entire 2,7h lot will be rented as soon as we reach an agreement with a potential

third party.

Appartment complex, Santa Rosa.

6 unit apartment house purchased in 1995.

After phase 1, all units are rented, 2 by non-family related renters, 4 by family members. Non family

member renters pay full rent, monthly and is collected by a family who lives on the farm. It is intended

that this allowance will stop as soon as he is being taken out of the farm and a micro-financial scheme

is put in place for them.

Farm after the typhoon in July 2014

25

The 4 remaining renters are related to the

backers and have a special treatment

towards rent payments depending on their

capacity to pay said rent and size of unit.

New and adjusted rents will be due from

May 1s t, 2015, leaving them time to adjust

budget. For those for whom adjustment is

the hardest, they are being provided with

tools and capital to increase their income or

with basic education towards a skill they can

use to earn on their own. Find more about this in the family beneficiaries section.

The current rent collected is 5500P plus 1200P that will be collected from new renter moving in on

December 30th, 4000P being donated to Rolando. On May 1s t, the rent collected will be increased to

1800P for a total of 8500P, none being donated anymore. However, a new wave of increase of rent

should follow on May 2016.

Table of rent collection:

Unit Rent/month on Dec

2014

Rent/month from

May 1st, 2015

1 0 500

2 1500 2000

3 1200 1500

4 2000 2000

5 2000 2000

6 0 500

Please note that a 500P rent is more considered as symbolical rather than actual compensatory rent.

This doesn’t make it less mandatory.

Therefore, unlike before, for more balance and equality between neighbors, all renters are now bound

by a lease contract with rights and duties.

Because unit 1 renter has the hardest time to pay his rent, he and his wife are appointed as concierge

of common space to compensate for the low rent.

This lot was the second biggest investment of phase 1.

During renovations

26

An architect has been contracted for this job for more security and because of the number of intended

renovations and improvements. He has been contracted on renovating 5 out of 6 units, and improving

the common area. The 6th unit was renovated by the renter himself.

The work on the 5 units included renovation of floors in unit 1 and 2, painting in and out all 5 units,

ceiling in unit 2 and 3, inside walls cementing, firewall re-plastering, doors change and CR doors

change.

The common area improvement included new septic tank, construction of gate and wall to stop

outsiders trespassing, dirty water irrigation, roof change (partially) and repainting, replacement of 17

year old water pump and re-cementing of pathway and water canal.

The 6th unit, the largest, was entirely repainted, outside and roof included, broken windows changed,

doors repaired and changed and kitchen under-sink shelf was repaired.

No more big renovations are intended for the next 10 years, only small repairs might occur from time

to time.

House n°1, Santa Rosa

1 unit house, purchased in 1995.

After phase 1, the unit that served as base for the team will be unoccupied for a few month but taken

care of by family members. Upon return from leave, project manager will resume his stay. However, if

a change should come up, a decision should be made upon occupation of the unit. (Please refer to

recommendations for more).

Insect screens have been put on most windows and the kitchen has been rejuvenated with paint and

a new wooden shelf. To this, kitchen tools have been purchased.

27

House n°2, Santa Rosa

1 unit house, living room, 3 rooms, separated kitchen, CR and bath separated, garage, garden, terrace.

Lot 150m², house 70m², garage 35m²

Intended to be sold because of high living

costs, no renovation or improvement has

been done on the house during phase 1. The

process of finding a buyer has been started

and handed to Marjorie Peñaflorida, our real

estate executive, who has asked an advance

on her commission in order to pay her

mortgage on her house. This, with tarpaulin

cost are the only costs we currently had on

this unit. The selling of this house is a secondary objective for phase 2.

Once the unit is sold, the family will have to be relocated and will be provided with a micro-finance

scheme in order for them to make an extra income.

Row unit, Cabuyao city

Living room with bintaas (wooden mezzanine) and kitchen, loft style. 36m². Purchased in 2009.

In order to find a place to stay for a family from the squatter’s in Las Piñas, this row unit house was

first intended to be renovated and improved by building a second floor. Cost expectation and too low

increase in total value of unit led the team to choose to buy a house instead (see corner lot n°2,

Cabuyao city). This unit is now occupied by one of the two families we took out of the squatters and

the new lot has been rented to the previous occupant as a thank you for their involvement in this

project.

This unit has been slightly renovated and improved, it should be repainted in 2015.

For now, the kitchen has been rejuvenated after a small cooking incident and the kitchen roof has been

replaced with transparent sheet for more light.

28

Squatter’s lot, Santa Rosa

Lot and small concrete house with one room and CR only. Purchased in 2013.

Intended for Sister Daniella, the lot was bought shortly before

the start of this project. The team had the task to have a house

built as improvement in order to move her and her son out of

the rice field where they lived outside as homeless people.

They used to find shelter in our chapel in case of bad weather.

Hoping to offer them a more dignified home with roof, walls

and a CR, the house was built shortly after the manager’s

arrival.

Unfortunately, Sister Daniella past away last October and the

son wasn’t to be found since then. When he finally

reappeared, he said he couldn’t live there anymore. He finally

changed his mind and decided to stay there and keep on

earning from his pedicab services

2 new houses

In order to help two families out of the squatter’s area near Manila we had to find them a new place

to stay. Therefore, the real estate park had to be extended.

Corner lot n°1, Cabuyao city

One unit house, 36m², with living room, 1 extension as room, 1 extension as kitchen. Purchased July

25th, 2014.

This house has been bought for a family from the squatters in Las Piñas.

House before renovations House after renovations

29

A symbolical rent has been put in place and will start May 1s t, 2015, according to the lease. It will be

increased within 2 years.

In order to create an income for the wife while the husband is earning from a job as a carpenter, we

added shelves for a sari sari store (mini convenience store in the Philippines).

When bought, the house was in a fairly bad shape, hence the price. The roof has been changed, ceiling

repaired, and entirely repainted. .

Corner lot n°2, Cabuyao city

One unit house, 42m², loft type, with wooden division for 2 rooms. Purchased Nov 11th, 2014.

This house has been bought, as the previous one, in the program to move two families out of the

squatter’s. The second family was moved to the row house mentioned above, which’s renter, her

husband and three children moved in this house, 20m away from their previous home.

In order to create an income for her, to add

to the salary of her husband, here too, a sari

sari store has been put up with small

improvements. An extra division has been

put up as well, in order to separate children

and parents. Per renovations, ceiling has

been rejuvenated and roof repaired, some

metal sheets have been replaced by

transparent ones for more light.

A rent of 500P/month has been put in place and will start on May 1s t 2015. It starts as a symbolical one

and will be increased within 2 years to come up to a compensatory level.

30

Sorsogon The second area of operations was around the city of Sorsogon were some family members still reside

and others were brought during phase one.

New building in Sorsogon city 4 lot parcel with 2 28m² units (one room and bin taas each).

This was the most expensive investment of the first 6 months.

When phase 1 started, these 4 lots purchased in

1996 were not taken care of. Two families from

the rice field in Santa Rosa accepted to move to

Sorsogon. It was decided, in order to cut costs,

to have a 2 unit house, ready for second floor,

built on two of the four lots, each unit with

enough space to have a mezzanine built in,

inspired by the row unit in Celestine.

Here, contrary to Dia Leyco, no architect was

directly involved. We hired one to file our building permit and draw the plan, not to supervise the

work.

The team of workers included 2 family members so the

expenses for labor could help them in their daily needs,

one of which was from Santa Rosa and made an early

move-in in order to get used to the city and the new

environment.

He now lives there with his handicapped mother, his wife

and their two daughters.

Here again, a symbolical rent, intended to be increased

within 2 years, of 500P/month starting May 1s t 2015, has

been put in place.

Unfortunately, one of the supposed renters has indefinitely postponed his intention to move in, leaving

the second unit currently empty. More on this in recommendations.

The total cost of building the house had to be increased because of materials being forgotten in the

cost expectation and a wrong positioning we could rectify in time on our first visit.

Parcel before improvements

Workers

31

Building permit was filed, but because of bad timing and quick construction, a penalty was charged as

well.

The house has been slightly improved with a mezzanine and a terrace for only one unit.

Parcel and land improvement had also to

be done so a fence and a water pump have

been ordered and should be finished in

December.

After typhoon Glenda in July, we spent on

converting fallen trees into wood later

used for both mezzanines and terrace.

Finally, the certificate of occupancy, to be

filed for end of construction is being processed by the same architect.

However, one terrace is not built yet and there is no front fence and gate.

Forest lot, Sorsogon city

Land lot with coconut trees and a house built by renter. Purchased in 1996.

Location and hard access to the road doesn’t make this

parcel of land ideal for any large improvement. Therefore,

it is intended to be used for breeding pigs and growing

coconut trees the current occupant can harvest and breed

for his own income.

No rent has been put in place and seem irrelevant for now

as they built their own house and are the only ones willing

to live there.

The current occupants, his wife and daughters, built their

house on their own. Only access to water was missing.

Therefore, a water pump was put in place for the amount.

As mentioned above, July brought a typhoon upon the

Philippines and this forest was hardly hit, the fallen trees were cut into coco lumber planks.

Finally, we invested in order to extend their already existing pig pen (half of the total cost being a loan).

32

Rice field, Sorsogon city

3h ricefield with house. Purchased in 1996.

Too close to the sea, half of the land can’t be

used for rice planting, however, a conversion

towards a fish pond for breeding is an idea

that could be studied. In the meanwhile, no

investment has been done, but a loan for the

rice planting season has been given to the

current tenant of the forest lot, who is also in

charge of this land. He will be charged

2000P/month during planting season as an

insurance, in case of bad future harvests for

example.

A big issue was the lack of irrigation and the proximity of salty water, these limiting them to one harvest

a year, instead of potentially three. After inquiring with the local authorities, we learned the city

planned on have a common water irrigation put in place for the area by the end of 2015. This, if pushed

through, would allow them to extend to three plantations per year. We will keep an eye on this matter.

His sister, her husband and three children, live in the house on the land.

Here again, no rent will be put in place as they have nearly no income and haven’t been integrated to

the helping program in phase 1.

House and lot, Sorsogon city.

House with living room and kitchen, 2 rooms, garden, driveway, terrace. Purchased in 2008.

Almost nothing has been done on this house which is

in a very good shape and only has 2 people living in it.

No rent can be put in place as currently they live

thank to monthly allowance sent by Susan Nagel. This

system is intended to be suppressed and replaced by

one where they can earn. More on this in

recommendations.

The main issue in this house were the doors. The CR door had to be changed as well as the door locks.

Adding the cost of obtaining a certified copy of title.

33

Families/beneficiaries This section will present the other part of our project’s goal in the Philippines: empowering as many

families as possible. Here will be enumerated the main that received support from the backers and

the means the team put in place to help but also ensure the money is being used for the intended

purpose: empowerment.

Moving to Camarines norte

Niece to Susan Nagel, family living on the farm.

Her, her husband and their two boys lived with her

parents on the farm in Santa Rosa. In order to empower

her and her family and help them leave the farm and their

parents, they have been helped to move back to her

husband’s family place of living, in Camarines Norte. It is

a very remote area, hard to access by car and making

communication with her very hard.

She was provided with a sewing machine and materials

for personal income.

A help to renovate their house was also provided.

Finally, for transportation and fish vending materials and capital, money was sent as a loan but

documents still need to be processed.

As for the documents, we are trying to get in touch with her and have her sign a simple

acknowledgment receipt of help instead of a loan, making this a donation.

Here is the thank you note she sent us: “Kuya Adi, this is xxx, thank you very much for the opportunity

that you gave us. This is a very big help for us. A great start to make us more independent. We will do

our best to make this opportunity go on. You are a big blessing for all of us. We hope you a great life

and good health. We can’t express how much we’re blessed to have you to part of our life. I and Rey

will take care of this. Once again thank you very much. Thank you for everything. God bless us all.”

34

First family out of the squatters

Niece to Susan Alcario, eldest daughter to deceased brother.

First and largest family to be helped out of the

squatter’s near Manila. She, her husband, and

their seven children were moved from Las Piñas

to the newly bought and renovated unit in

Cabuyao city. We met them a few days after our

arrival in the Philippines, during the funeral of

their father. They couldn’t help but ask for our

help which we gave them and promised them to

find a solution to their need for better living conditions.

She has been provided with a starting capital for the Sari Sari store we had built in the house, while

her husband keeps on going to work as a carpenter.

For household necessities, they have been provided with

comforters for sleeping, a gas tank and stove, kitchen

utensils, plates and glasses, a dish cabinet as well as a

table and chairs.

Finally, in order to extend her capital and her income, she

asked for a loan.

In order to ensure payments and start a small

compensation for house maintenance costs, they have

signed:

An acknowledgment of receipt of help, listing the

money they received and the purpose;

A Loan contract with monthly amortizations;

A lease contract with a rent of 500P starting May 1s t.

An early diagnostic of the effect of the help is two sided, they are in a better place but we are worried

their money management might be a bit flowed, therefore, we decided to put a monitoring process in

place with a monthly update on her income and capital situation. Our follow up executive will be in

charge of collecting it and transmitting it to us.

Squatter’s area in Las Piñas

35

Second family out of the squatters

Nephew to Susan Alcario, eldest son to deceased brother.

Second family to leave the squatters, they have been

moved to the row unit in Cabuyao city. With his wife and his

three, soon to be four children, they are highly motivated

and willing to work hard. They have been provided with a

capital to start a vending business, with a bicycle with

sidecar, as well as with household necessities upon moving

in.

Before finding a long lasting solution for them, we also

helped them ease their problems while in the squatters and

they actively participated into finding a solution.

We also took the unused tricycle from Marjorie Peñaflorida, had it repaired and entrusted it to them.

However, there is no line yet, making it illegal for him to use as a tricycle for hire. This issue should be

dealt with during phase 2. Repairing expenses were dealt with, however, these cost are classified as

maintenance of belongings, not direct help.

Finally, he asked for an extension of help and therefore took a loan from our micro-financing program

in order to buy a fridge and burger machine for increasing his income.

They signed with us:

The lease agreement for the row unit house in Celestine, 500P/month, symbolical rent starting

May 1s t, 2015;

A loan agreement 500P/month amortizations;

A lease agreement for the tricycle;

Acknowledgment of help listing the above charitable help, for their information and

understanding.

They stroke us as highly motivated and serious, we believe they will succeed and we will see to as they

do.

The tenant of the forest and ricefield in Sorsogon city

Nephew to Susan Alcario.

His wife, him and two girls (one was born a few weeks ago), live in the forest in Sorsogon city where

he built his own house by himself. He is in charge of the rice field as well.

36

He participated as a skilled workers for the construction of

the house in the same city. He also built the fence, the

mezzanine and the terrace there. After typhoon Glenda,

he is the one who suggested and took into his hands the

transformation of the fallen trees into wood lumber

useable for our future projects. Finally, he participated in

digging the water well in the forest.

We also his talented wife a sewing machine (with few

materials).

Finally, we gave him a capital to start breeding pigs, he will

then sell us piglets for a low price to give to other

motivated families. He took half of the pig pen cost upon

himself with a loan that also includes an advance for pig feeds.

In order for him to cut interest costs on lending money for harvest season, we also lend him money for

this purpose.

In his case, the loans will be paid back right after harvest season and when he sells his pigs.

He signed with us:

A loan agreement on the rice field with an insurance fee (in case of future bad harvest or

emergencies);

A loan and acceptance of help agreement for the pigs, pig pen and feeds;

A leasing agreement on the forest lot and the farm lot, allowing them to exploit the land as

they see fit, with no rent fees applied as they built their own house.

He is very hard working and highly motivated towards the projects we suggested him to put up. He will

be heavily monitored and we hope he will be successful.

Failed moving out of the farm, Santa Rosa

Nephew to Susan Nagel, he is the eldest son to a deceased sister.

Him, his wife and two sons were supposed to go live in the second unit we had built in Sorsogon city,

which he agreed to in the first place. But due to change of plans and lack of budget, we had to postpone

the tricycle we told him we’d provide him. However, work was waiting for him and opportunities were

put in place: piggery, rice field, painting on our construction projects. However, new opportunities

arose in Santa Rosa and he asked to postpone his moving date. He is currently staying on the farm in

37

Santa Rosa but will have to move out once a plan has been found for it. Then, if the unit is still free in

Sorsogon, he might move there. In the meantime, we are trying to fill the unit and make sure it isn’t

empty for a too long time.

We gave him as allowance and help for his children. Also when his wife lost her baby (dead during

pregnancy) we accepted to take charge for the hospitalization.

No documents have been signed with him.

He is kind hearted but highly hesitant and hard to convince. We will continue monitoring his decisions

and try to come up with a solution that can fit everybody, even if the last minute refusal had a bad

effect on our motivation to help him.

Our tricycle driver and his family.

Nephew to Susan Nagel.

He lives in the first and biggest unit in Dia Leyco with his wife and 6 children. He is the care taker of the

Yamaha tricycle, which he looks after as his own. He is our driver for long days of appointment and

duties in Santa Rosa.

After renovations were done in the units, he

asked for help to reconnect the electricity to

his unit.

He also asked for some help for his children.

Finally, in order to give him and his wife extra

income, we helped them start a fruit vending

pushcart business.

He signed with us:

A loan recognition.

A leasing contract, with a 500P/month rent, starting May 1s t 2015, and that will not increase

in exchange of being the concierge for the rest of the lot.

A leasing contract for the tricycle, no rent applied.

He is very kind and helpful, ready to work, as long as it isn’t too annoying for him. He cares a lot about

his family, especially his wife who has heart problems.

38

Merlita Torres, team member but also beneficiary

Niece to Susan Nagel.

She lives with her husband, two sons and daughter, in the new corner unit in Cabuyao city. She is a

valuable part of our team and has been put in charge of the car because our only driver is her husband.

He daughter, Alyssa, is about to enter college and is a scholar. We chose her as our follow up executive,

she will collect rent and amortizations and serve as representative of the project manager towards the

beneficiaries.

Merlita took several small loans during the beginning of the project.

We then helped her move in and start a Sari Sari business.

Finally, she took two extensions on her loan in order to extend her business.

We signed with her:

A leasing contract for the corner unit in Celestine homes, with a 500P/month rent starting

May 1s t 2015.

A loan agreement with 750P/15days payments starting in January.

Her husband and her are big assets to our team, they are very helpful and don’t hesitate to show what

they think. They are highly motivated and we will now see how they handle the money we loaned

them.

Moving to Camarines Sur

Niece of Susan Nagel, daughter of deceased sister.

She was living in the apartment complex in Santa Rosa,

but in order to reduce their living costs we suggested her

to find opportunities outside Santa Rosa. Therefore, she

suggested she could go back where her husband comes

from, in Camarines Sur.

She was moved to the Bicol region with her 4 year old

daughter and her husband. Before moving, we provided

her with sewing materials and tools.

In order for her husband to make his own income, we loaned them money for a second hand motorbike

and repairs.

We also gave her a capital as starting money (they managed to buy a small hut with a part of this

money and have the electricity connected).

39

However, this all was for nothing as on October 10th, we sent her 3060P so she could move to a much

better place as they agreed to live in with a Swiss-Filipina that was looking for some company and help

in the area. Susan Nagel referred this family to her. Note that they could bring the motorbike and

sewing machine with them.

They signed with us an acknowledgment of receipt of help stipulating the details of the loan as well.

Moving to Sorsogon city

Nephew of Susan Nagel.

Him, his wife, and two children, are the first out of three families who left the farm in Santa Rosa.

Motivated, they were brought to Sorsogon city and he earned his first income there by being a helper

on the construction of his future unit. His wife, who was previously trained as a foot spa service person,

was provided with materials and tools so she could start her business there. This option permitted her

to stay home and also take care of their under aged children. However, after a few weeks living there,

she thought about getting help from her handicapped

mother in law who stayed in the farm in Santa Rosa. Happy

to be reunited with her grandchildren, we moved her there

as soon as we had to go back to check on the construction

advancements.

In the meantime, for transportation purposes, we provided

Rodel with a bike.

When the building was almost done, we provided them with furniture, that most are part of the lease,

as well as with tools for gardening.

The documents we signed with them are the following:

A leasing contract for the new unit in 21s t street, for a starting rent of 500P/month on May 1s t,

2015.

An acknowledgement receipt of help as listed above.

For now, everything seems to be fine, they have several opportunities that only lie on their willingness

to work: help harvesting the rice, pigs will be provided, a garden behind the new house, the foot spa,

and the area is slowly starting to be dynamic with more and more buildings coming out of the ground.

His wife is good with money and very motivated, she tries to temper her husband who has a tendency

to doubt and worry a lot about his children. He is a caring father that also took his handicapped mother

in without even thinking twice about it.

40

To these families, we must add three educational beneficiaries (actually, this program starts during

phase 2).

Please note that two tricycles and a car are under the names of the backers and have been lent to

different beneficiaries, however these don’t need further explanation here as their purpose have been

evoked above.

41

Financial overview of phase 1 (Graphs and analysis)

Contents

Budget and exchange rate calculation ...................................................................................................................................................................... 42

Help to families .................................................................................................................................................................................................... 444

Real estate investments ...................................................................................................................................................................................... 4747

Extra costs............................................................................................................................................................................................................ 499

Financial overview conclusion ............................................................................................................................................................................... 511

This is an overview. All figures, tables and graphs (except for the annual exchange rate) that you will find in this financial overview have been collected, created

and filled in by the author of this report. Most relevant figures have been removed from this public report.

42

Budget and exchange rate calculation The announced budget for Phase 1 was xxxxxCHF, but it has been reduced according to the needs of the project. Here is an overview of fund transfer that led

to the calculation of the exchange rate that will apply on the 1s t phase of the project.

Dates of transfert EUR CHF PHP CHF=PHP EUR=CHF

(official rate for June)

Official rate

Loss on transfer

CHF

% of loss

June 6, 2014 44 48,7888 10%

June 2014: HSBC EUR from personnal

account 47,3730 1,2065 48,9149 3%

June 18, 2014 45,0000 49,1205 8%

June 20, 2014 48,8730 48,9641 0%

June 28, 2014 46,0000 49,1147 6%

July 10, 2014 47,4788 48,6121 2%

July 24, 2014 47,2935 48,0089 1%

August 14, 2014 46,5993 48,1921 3%

September 11, 2014 46,2922 46,9392 1%

October 16, 2014 44,8667 47,6461 6%

November 26th, 2014 45,1947 46,5349 3%

Total Phase 1 46,3905 3%

The exchange rate we can apply on our expenses will include losses made on fund transfer and money conversion (please note that before being changed

from CHF to PHP, the money had to be changed to USD, this leading to a double payment of bank exchange rate cuts), the overall loss of xxxx CHF is estimated

thank to the following rates (according to http://fr.exchangerates.org.uk/historiques/CHF-PHP.html#graphiques). However, this can’t be helped and is just a

rough estimation (rates are determined on the market and fluctuate even within a day, the rate exposed here are daily averages), but a solution should be

found not to have to change the money into USD first. The best and least expensive means of changing the money should be found and used as default instead

of MLhuillier or moneychanger and others, used during the first weeks of the project.

43

For your knowledge, here is the evolution of the exchange rate between CHF and PHP during the last year. The PHP is, in average, getting stronger, or the

CHF weaker since November 21s t, 20136.

So the exchange rate applying to our project is the following: 1 CHF = 46,3905 PHP

And the total amount of money sent is the following: XX PHP

6 exchangerates.org.uk

1 year exchange rate chart Nov 21st 2013 to Nov 20, 2014

44

Help to families

Here, a family can be a single person, a couple, a single parent with children, or of course,

both parents and their children.

The aim here is to insure their future needs by offering them a capital and tools to create an income

that will provide for said needs. It can take various forms such as but not limited to a sari sari store

capital (local vendor for every day needs, very popular in the Philippines), pushcarts, tricycles,

carinderia (small self-service restaurants) or foot spas.

Giving them the means to change their own lives on their own while making sure they don’t stay

dependent on our help is a hard balance to find as there are many of them. Therefore a choice has

been made towards those most in need and willing to participate in our project (people from the

squatters or on the farm with very poor living conditions) in order not to put too much weight on the

budget. We also divided the amount given to them in two means, explained underneath, and upon our

own judgment of their capacity to take responsibility and become independent quickly.

Empowering them should have two positive effects: insuring their children’s future w ith at least basic

education and, the initiation of rent that will compensate for our costs on maintaining the houses they

live in.

Principally, two means of help have been used here:

- Either charitable help with no intention to get the money back. No money is directly given. We

buy tools or goods for them to put up a business to make an income from at home for the

women. We also suggest going back to get a training in any not to costly school of their choice,

but this option has not been chosen so far.

- Or, a micro financing loan with no interest is given to them on their demand or as an extension

to the charitable help. It can be paid back as a whole on a given date, or divided into monthly

payments.

A written agreement is signed between us and the beneficiaries, with restrictions and schedule

of payments.

45

As for the overview, the following graph shows every family that has been helped, the amount

given and how much loan. Loans are to be paid back within the 2 next years (2015-2016), upon financial

capabilities of the beneficiaries.

A graph for a visual understanding (Names and amount have been deleted):

Am

ou

nt

in P

HP

Share of helpBetween families

Financing Loan

46

We see here that the actual cost of the help is lower due to the loans. However, we must make sure

they are duly paid back in time. Therefore, a following up system has been put in place. A

representative will visit each beneficiary of a loan and make sure they pay in time by collecting the

money on due date, filling up the follow up sheet, have it signed by the payers and deposit the money

on an account created for this matter.

Finally, here is a graph showing the share between loan and micro financing on the overall cost of the

help to the families:

We see here that the loan share is up to 36%. Our goal is to increase this share in the future and make

sure all payments are being followed. A healthy follow up and duly paid amortizations are a sign of

healthy business and money being well spent by the payers.

Financing

64%

Loan

36%

Total Help divisionFinancing vs Loan

47

Real estate investments We here define the investments as big or small renovation, improvements, legal costs and taxes pertaining to the different estate belongings, or, of course,

as extending the estate by buying houses, lots or farm land.

The following table has been built to show the different aspects of investments. These were divided into four:

- Buying costs are all costs that are induced in acquiring an estate. Buying price but also capital gain taxes, documentary tax , stamp, paper processing

fees, lawyer and commissions to agents.

- Improvements for any non-existing construction, from water pumps to an entire house.

- Renovation for existing constructions that needed rejuvenation.

- Other costs would include but are not limited to taxes, third person (lawyer, agent, and broker) fees or small retributions to helpers.

The total real estate investment cost is xxxx. Main investments went towards improving the four lot land in Sorsogon city where a two unit house has been

built as well as a fence, a mezzanine and a terrace. The second biggest investment went towards renovating a 6unit house in Santa Rosa where nothing had

been done since purchase in 1995 (only small renovations in 2007).

48

The following chart allows a better visualization of

the main investments and their structures.

Both corner lots purchased for the families from the

squatters are third and fourth in our investments,

however, the biggest part of the investment has

been done into acquiring the units and only small

renovations and improvements were needed.

We also see that on the total investment cost, other

cost are rarely relevant. In the case of the house for

sale in Santa Rosa, the search for a buyer led to extra

costs that will be later compensated by the selling

price.

These figures will mainly be useful in the future

when time will come to evaluate the value of each

unit in order to calculate a selling price and the

possible gain induced by the total operation.

Real estate investmentsCost division

Others costs

Renovations

Improvements

Buying cost (tax, lawyer, com')

Extra costs (public) This section is an overview on cost not directly imputable to the help given to the families or to our real estate investments but that are indirectly needed to

have the project go on. These might include, but are not limited to: office supplies, meals, transportation, bills or household expenses.

Due to bad information capitalization or simply having been forgotten, an accounting key had to be used on this section as some expenses weren’t entered

on the accounting follow up sheet during the 6months of phase 1.

66 341, 64 PHP, has been redistributed between each line of extra cost according to their weight within the total extra cost as follow:

Weight within extra cost = key

Amount redistributed

Total PHP CHF CHF/Month

Initial extra cost calculation 309667,94 6675,24 1112,54

Meals 47,22% 31329 177568 3827,67 637,95

Trsp 6,21% 4118 23340 503,12 83,85

bills 11,02% 7310 41432 893,12 148,85

Household 7,60% 5044 28589 616,27 102,71

Outing 9,74% 6462 36623 789,44 131,57

clothes 2,06% 1364 7733 166,70 27,78

Personal expenses 7,32% 4857 27528 593,40 98,90

Health 1,11% 737 4179 90,09 15,02

Filipino 0,52% 343 1943 41,88 6,98

Dons et remb 3,27% 2172 12312 265,41 44,23

Project mngt 3,93% 2605 14762 318,21 53,04

Common pot N/A 7000 150,89 25,15

Sorsogon (transportation, meals..) N/A 65361 1408,93 234,82

New Total after applying keys 448371 9665,14 1610,86

To these lines, we added the estimation for common pot expenses (daily water and small sari-sari expenses) and for back and forth trips to Sorsogon where

we chose not to apply keys as the first is already an estimation and the second has been strongly supervised.

50

Our main extra cost went towards meals. Please note that these meals were for 3 persons at least living in JB. Far behind, in second place, we find the expenses

to go on the second site of operations, in Sorsogon City including transportation to go there and meals for the entire live-in family (7 persons at least).

The cost of the car itself was not included in any of the three sections as it is a tool used for several different aspects of the project. However, its cost is

indicated into the final calculation.

Meals(including outside

mealssuch as

fastfoods orrestaura

nts)

Trsp billsHousehol

dOuting clothes

Personalexpenses

Health FilipinoDons et

rembProjectmngt

Commonpot

(changefor

water,tricycle)

est.

Sorsogon(transpor

tation,meals..)

New Total after applying keys 637,95 83,85 148,85 102,71 131,57 27,78 98,90 15,02 6,98 44,23 53,04 25,15 234,82

0,00

100,00

200,00

300,00

400,00

500,00

600,00

700,00

Am

ou

nt i

n C

HF

Monthly extra costs expenses

Financial overview conclusion Please note that transportation costs have been divided into intended accounts, but, the car costs of

purchase and maintenance could be redistributed with an accounting key (as used in extra costs),

however we chose not to do so as it will still be used in phase 2 and 3. In order to even lower the buying

cost impact of the car, options are being looked into such as renting it for private or corporate use. In

the eventuality none of these options work, and when it isn’t useful anymore, the car will be sold.

For a better visual understanding, let’s look at the following graph showing the shares of each main

expenses done during this phase of the project:

We can see that most expenses went towards real estate issues and should be recovered with the

creation of rent and appreciation of selling price.

Extra costs and 65% of the help to families (0.65 ∗ 0.17 = 11.05%) can’t be recovered, which are

23.05% (12% + 11.05% = 23.05%) of total costs of phase 1. To this, you can add maintenance on

the car and loss on reselling price.

However, this can be recovered with different means such as appreciation of price on estate

belongings and creation of profitable rents, which is the entire point of phase 2 (see section on phase

2 for more).

Extra costs12%

Real Estate63%

vehicles8%

Help to families

17%

DIVISION OF COSTS

52

What is coming in 2015 In this chapter, we will describe all the work that is left for phase 2 and 3 to “empower as many families

as possible while ensuring the future of assets”.

Phase 2 has already started During phase 1, some issues were chosen not to be dealt with as they weren’t as urgent as others.

However, we kept those at mind and started preparing and making sure they could still be realized.

Here is an overview of what we intend to do during phase 2. Please not that phase 1 programs will be

pushing forward and will be monitored as well during phase 2 in order to make sure the money is well

spent and, rent and amortizations paid in time.

Description

House for sale in Santa Rosa

The responsibility of finding a buyer for the unit in Macabling has been given to Joy Peñaflorida as she

works as a sales person for a real estate company.

The 150m² lot is offered at 1 800 000PHP, we are hoping to go above 1 500 000PHP. We currently have

agents that want a piece of the deal and one prospect buyer from Korea.

The deed of sale will either be signed by the owner, Susan Alcario Nagel, or by her representative,

given she provides a Special Power of Attorney.

We hope for a sale within the first quarter of 2015.

Farm, Santa Rosa

This is the biggest asset of the project. This 2,7h rice field land is intended to be rented for developing.

If no serious renter/investor appears within the first semester of 2015, we can start thinking about

selling the lot.

We wanted to find three brokers before the end of phase 1, however, Christmas period is a busy period

for agents and broker around the area. None had time to meet with us. Therefore, our team remaining

in the Philippines has been provided with files to hand to any interested brokers including a copy of

the title, a plan of the zone and some indication of our expectations. If no broker is found before the

end of February 2015, the manager shall step in.

Once a project or investor has been selected, please note that finalizing the lease and negotiation

might take until 8 months.

53

The land will have to be reclassified and surveyed before renting. We hope for industrial warehouses

or commercial use. With no intention to do so in a first place, we are open to the idea of dividing it

into two blocks, if an interesting and pertinent plan is suggested by any prospect renter.

Santa Rosa, as said in the first part, is one of the first stops of developers going south from Manila and

willing to invest in cheaper but accessible (with infrastructures) areas.

Car

The car is showing weaknesses and not adapted to the Filipino climat. It is not presenting the financial

advantages we expected. That is why it is now put for sale in order to minimize losses. If no buyer is

found, a renting scheme shall be put in place for companies that need vehicles for transportation.

Finalizing recent estate purchases.

Both bought units, are officially owned by the backers. However, title transfer procedures took more

time than expected and aren’t finished yet. This will be settled during phase 2.

An extra beneficiary

In Sorsogon City, one beneficiary is still looking for a cheap sewing machine and some tools too ,

therefore, it shall be purchased during phase 2. She has 3 children and is learning to sew with her

brother’s wife.

Melody Dolosa

She is the biggest asset to Ardilyadev’s team. She has been granted the chance to retry, for the third

time, to pass the bar exam. Review are starting early 2015, she will therefore not be able to pursue her

work and will reside in Manila for more privacy to study. An allowance, to be negotiated with the

backers, will be granted until the exam’s end in November 2015.

In order to optimize her work, we intend to purchase a better computer for her studies, and give her

old machine to the people in Sorsogon who have already been provided with an internet access and a

smartphone, this all in order to improve communication with the remote area. Price is also to be

discussed with the backers.

Irrigation, Sorsogon city

Finally, during phase 2, we will have to monitor advancements of Sorsogon city’s irrigation plan for

where the forest and rice field lots are. This will have positive consequences on the work or our

beneficiaries there as it will increase the number of possible harvests.

Apparments in Santa Rosa

After inspecting the units after renovations, some renters have minimal complaints that will have to

be dealt with shortly. The common area has also small issue to be taken care of. Here is a list and cost

expectation:

54

Unit 4 has a water leak on the right back end wall. 8000P

Unit 3 has a water leak under the sink a wall from the CR. 5000P

The water evacuation canal in front of the lot is full of dirt that should be dug out. A renter

suggested to do it himself. 10 000P

A cover for the pump should be built, Renato, suggest himself. 8000P

We are still waiting for our architect to deliver the gate. Final payment of 4 000P has been

retained.

Unit 6 is not connected to the electricity line. Settlement with Meralco (local electricity

supplier) and reconnection will cost around 8000P, but a part will be supported by the renter.

Total cost left on Dia Leyco units is 43 000P.

The leaks will be dealt with as soon as we have a plumber have a more detailed cost expectation sent

to us.

Newly built house

A renter will have to be found as soon as possible, either a stranger or a family member.

Forecast schedule Phase 2 is completely dependent on the advancements on renting or selling the rice field lot. The

income made out of it will subvention our issues in phase 3. However, if a buyer is found for the house

in Santa Rosa, the money will be used to initiate some helping programs from phase 3, especially

relocating the current tenants.

Small issues such as finalizing the purchases or buying the sewing machine, can be monitored and paid

for from abroad. However, a buyer for the house or a renter for the land, will have to be dealt with in

person, having the project manager, come back to the Philippines. This is estimated to happen around

end of February. Therefore, he will be abroad for the three first months of phase 2. This will also allow

to test how strong and solid the programs put in place during phase 1 are.

With luck, phase 2 will end before winter 2015.

Financial Phase 2 should be far less money consuming than phase 1 as it is built to inject money for phase 3.

You can see below a summary of expected income during phase 2:

House in Santa Rosa selling price: xxxPHP at least

Ffarm renting price: xxP/m²/month or selling price: xxxPHP at least.

Car selling price: xxxPHP at least.

55

Phase 3 is being prepared Phase 3 will start as soon as a new source for budget will have been found, it will basically be the same

as phase 1, but for different families and less extensive on an estate point of view. In most cases we

will expose here, the final plan has not been finalized yet and can change until taken into hand. But we

will expose below the core ideas and goals we have for units and families that are still waiting.

Description

Cabuyao row unit

This unit has been slightly improved during phase 1 (see sheet and description), but some renovation

needs to be done in order to rejuvenate it as walls are very dirty and a leak can be observed in the back

end of the unit. Painting and repairs should not exceed 30 000P for labor and materials.

Brother living in the farm

Living in the farm, him, his wife and three children, will have to be relocated once the land will have

found a new purpose. A new house will have to be found, comparably to what has been done for the

beneficiaries from the squatters, a capital for vegetables and fruits vending should be also added for

them to improve their income as they are depending currently on the allowance they get from the rent

from the apartments in Santa Rosa. A house and lot, including renovation and improvements, should

not exceed 450 000P, capital, place and tools for business should not exceed 70 000P, including a

possible loan. In the same way as we did previously, they will be required to pay rent a few months

after moving in.

Second brother living in the farm

As exposed previously, a place will have to be found for him and his live-in girlfriend once the farm is

repurposed. As per request of the backers, the plan here is slightly different. Budget and willingness

to help is lower. Therefore, the idea is inspired from Sister Daniella’s program. After discuss ing with

him, he was more than willing to go live in the squatters area, but because of his relationship with the

backers, we are currently looking for a 2 lot land right next to the main road where we could have a

house built and have a shop for fruits and vegetables vending put up. The right (not ownership) on

both lots should cost around 30 000P, and the improvements should sum up to around 250 000P, plus

70 000P for their business (including loan). Here again, a rent is intended to be put in place.

Current tenant of house for sale

Elder sister to Susan Nagel, she is currently living in the unit which we have put for sale. Once a buyer

is found, we will have a month to find her a new place to stay in. Three options are possible here. First

one is transferring her and the two boys to the unit that is only used when the project manager is

present, second one would be the same as for the first brother mentioned above: buying a house and

lot for around 450 000P, including renovations and improvement. Help for capital for a business is not

56

necessarily out of question, even if she already took a loan from us, and should not exceed 40 000P.

The third possibility will be detailed in the next section, she could be put in charge of the new master

house the backers are thinking about building.

Lest family out of the farm

As he postponed in the last minute to go live in Sorsogon city, a new plan might have to be found for

him, or a tricycle with line, as promised and still intended by the backers, should be purchased and put

into his charge as an opportunity to make income there. A cost of tricycle with line is estimated around

100 000P. For the meantime, he will be staying on the farm.

Tricycle

This vehicle, put in the care of the second family that moved out of the squatters, has no line. Serious

and hardworking, they can manage without an income from the vehicle. However, a line has to be

associated to the tricycle in the future, or its’ use is almost null. A line plus administrative fees should

not exceed 45 000P. We are still waiting for a more precise cost expectation.

Forecast schedule Phase 3 will probably start before a definitive plan for the farm will have been settled, when the house

in Santa Rosa will have found a buyer, as we will have to move the tenant. However, once she will have

been moved, other phase 3 issues will have to wait. This phase should last around 4 months, as the

team earned experience in the Philippines and will be more effective. With phase 2 ending around

beginning of winter of 2015, phase 3 will start on the beginning of fall season 2015 and end by

Christmas 2015.

Financial forecast These are the certain issues that will befall on Ardilyadev during phase 3, but the size of the Alcario

family and the living condition of some cousins still being precarious, the list could become longer upon

backers’ requests. For now, phase three is expected to cost:

Cost expectation

Rolando Alcario 520 000P

Jose Alcario 350 000P

Adelinda Dolosa 40 000P to 490 000P

Honda tricycle 45 000P

Medel Romero (extra tricycle) 100 000P

Total 1 055 000P to 1 505 000P

These costs can be covered by selling the house alone. But part of that money will be already syphoned

by phase 2 maintenance costs.

57

Ameliorations and recommendations During phase 1, the team discovered a lot about each individual and non-beneficiaries were always

present, sometimes hoping we would show them more interest. On its management of the project,

the team has learnt a lot and now can have a look on the work that has been done, its mistakes and

successes. This exercise allows us to improve our work. We can therefore enumerate underneath

ameliorations and recommendations for the following phases.

Exchange rate

The loss from lower rates and from fees are impossible to avoid when transferring money from abroad.

However, they can be reduced and that is what we should try to do. Either by cutting deals with the

bank, which we tried but our influence wasn’t big enough yet. Maybe we could try again in the future.

Our second option would be to test transfers with another bank and compare losses. We opened a

new account with another bank, we should be able to do so shortly.

Our main recommendation on this is the following. Once an income will have been earned from either

selling or renting, an amount that would cover a year’s cost expectation should be left on a savings

account as dormant. It will produce some small interest and will never have crossed an exchange rate.

Moreover, we saw that the Filipino Peso’s value seems to increase, if the trends continues, it might

not be a bad long term placement.

Leasing and rent Phase 1 has greatly improved the approach of renters and none has shown any complaint on paying

symbolical rent or increasing their rent. Of course the follow up that will take place is a very important

task and will have to be heavily monitored. We intend to make a new wave of increases after a year or

two. We included the possibility for the lessor to increase the rent by 10% yearly, if needed this

feature can be used.

Another issue will be to have the remaining lessees have pay a rent, even symbolical.

Project management The team has worked intensively, each member on his or her own pace. However, some

responsibilities couldn’t be taken by anybody else than the manager, reducing therefore his

concentration on other matters. Choices had to be made and e-reputation and website maintenance

was left aside, especially by the end of phase 1, when became more intense.

On this we recommend to add another member, maybe from the younger generation, which could

learn how to maintain a website, which requires organizational skills and of course computer skills.

Phase 2 being less time consuming, this could be done with closely to no cost. We also would need a

58

follow up executive and messenger for the Sorsogon area, we are currently having Maria Chona

Hachaso, help us.

Another project management issue concern files processing and organization. The current place where

the team works has access to the internet and in well furnished, but for a daily life matter, it is not

operational, it lacks space for all the documents. Let me remind you we are talking about 12 different

estates and 20 beneficiaries, for now. These numbers are supposed to increase during phase 2 and 3.

We recommend the creation of an office space, even if small. Two options here, either the current

center of operations, the unit in JB village, is rearranged for this purpose, or if a new master house is

chosen, creating a special area for office and administrative matters.

Finally, during phase 1, for administrative matters, some documents were needed such as special

power of attorney or copies of titles. Some documents we didn’t need but will need are still missing

and possibly in Switzerland with the backers. We strongly advise the backers to give us copies in order

to cut expedition time and cost when needed.

Estate appraisal Most of the estates have been purchased prior to 1996, before the Asian crisis led by Thailand and

before the awakening of the great Asian economies. Driven by these issue, the Filipino economy has

largely evolved and one can’t make a good estimation of the value of the possessions on his own. In

order to know what the estate is worth, to know if these three decades were profitable, an evaluation

should be undertaken.

We recommend to hire an agent and have the estates appraised, at least the most consequent ones.

Of course, an appraisal will be limited by the issue of finding an actual buyer in time, but it will give the

owners a good idea of what could be done, and make better choices in the future as it includes also a

small market study.

Semestrial visits The following up process will be undertaken by a 15 year old girl and therefore will have to be heavily

monitored by her parents and her mother. Even so, and even if an adult would have been chosen, the

absence of the backers inspires mistrust and abuses of the system. Regular visits to the beneficiaries

and to the renters should allow to maintain trust and make sure everything is fine. The owners have

their own responsibilities towards their estate as well.

We therefore recommend, once phase 3 is over, a visit every 6 month during the three first years

following the end of the project, for at least 4 weeks, then a visit per year of at least 6 weeks. It has

to be undertaken by either the project manager, or by the owner, Susan Nagel.

59

Reinvesting for more profits In order to reduce risk and improve profits on investments in the Philippines, we strongly suggest to

invest in other sectors. That is the very point of finding a renter for the farm in Santa Rosa. A simple

financial saying is applied here: “never put your eggs in the same basket” because if the basket is on

fire, all your eggs will burn.

If only in the real estate business, other investments present themselves:

Higher end units, for richer and more reliable renters;

Commercial and industrial leases;

Front of sea ownership in Sorsogon city, a future touristic spot that shouldn’t be ignored for

too long.

Other than in real estate, we strongly suggest investing in shares of the electronics industry in the

Philippines as the Chinese economy is growing and becoming more expensive, the archipelago is one

of the growing countries in the industry. Here is the table of Filipino exportation evolution in millions

of dollars:

Masterhouse The wish of the owner is to have her own place when she comes to the Philippines, somewhere where

there are less noisy neighbors but still close to the city. We suggest to combine this idea with two other

0

5000

10000

15000

20000

25000

1967 1970 1975 1980 1985 1990 1995 2000 2005 2010

Non ferrous metals

Clothing

Knitwear

Leather

Wood articles

Electronic components

Telecommunications equipment

Computer equipment

Electrical apparatus

Non ferrous ores

Other edible agricultural prod

Non-edible agricultural prod.

Fats

Sugar

N.e.s. products

60

issues: relocating the tenant from the house for sale in Santa Rosa and creating an office for better

project management.

The presence of a tenant will ensure the house is well taken care of and no abuses are done by

neighbors or passersby.

The idea would be to build a two story house, ground floor being for her and her two boys, the first

floor being divided into 4 rooms, including the said office. For a 100m² on the ground, the total cost is

estimated around 5 million Philippine Pesos. But this could be partly reimbursed by the selling of the

other house in Santa Rosa, the rest of the capital could come from the rent on the farm.

Empty units There are still two units a plan should be founds for. The first is the second hous in Santa Rosa, where

the manager is currently staying. During the project, nobody has to move in as it is the center of

operations for this project. However, a plan should be made on whom to live in once the project will

have been settled.

The second issue is the second unit in newly built house in Sorsogon city.

Sorsogon In Sorsogon, an issue remains with the tenant of the house who hasn’t any income to start paying even

a symbolical rent. She is depending on the allowance Susan Nagel sends her from Switzerland. Her live

in daughter will receive help for her studies but an income for the mother should be found. Slightly

hindered by her health, we suggest to have a small shop built in front of her house, but with school

supplies and goods that can’t be found in that area. Her house is right on the way tricycles take to leave

the subdivision. A cooking stand seems like a good option as well.

Another suggestion we have is for the rice field that can’t be fully used because of the salty water. We

here observed that a lot of neighboring land have put a fish pond in place. The current land manager

has a network and experience in the business that could help this project go through. Once the farm

in Santa Rosa has been dealt with, we suggest an investment of around 250 000PHP for a fish pond.

This will increase the revenues on the land and increase the income of the family members in the area.

61

Conclusion After 6 months of work with and for the Alcario family, the team is now known and respected. The

idea is to keep going and try to inspire others to work harder and take responsibilities. Phase 1

increased the overall value of the Nagel family estate as well as the number of belongings, rising it

from 10 estates and 2 vehicles to 12 estates and 3 vehicles.

20 families, out of 11 siblings and 40 nieces and nephews, have been helps, even if only a little bit, and

this number should increase by the end of the project.

Not only this, but the overall organization of estate and beneficiaries has been largely improved, as it

was virtually inexistent. Individual sheets for quick understanding (see appendix) have been created, a

following up process put in place and leases, agreements, loans and acknowledgments have been

signed for legal purposes and guidelines.

We believe we are making a difference but that the road is still very long, even once this project is

over. The size of the estate is too big, and the family too wide, to be ignored any longer. The Filipino

economy is rising and is where China was 20years ago, before its economic boom and rise of

attractiveness. The Nagel family has a chance it must take to make a difference for themselves and for

the others. Ignoring this fact would be a big mistake for the future and will define the way tens of lives

will evolve.

Phase 2 has already started and will replenish the budget for phase 3 but even after phase 3, issues

will remain and systems can be put in place, Ardilyadev will be there if possible and could create a

health insurance system for the beneficiaries or education sponsorships.

62

In memory of Tito Ondin and Sister Daniella