The power of SALN

On May 29, 2012 our entire country and the rest of the world watched as the senators, acting as judges in the Impeachment Trial of Chief Justice Corona, handed their verdict. Yes, the news was carried by no less than the New York Times. The verdict was a resounding 20-3 in favor of a conviction.

And the decisions of all 20 senator-judges were based on the failure of the CJ to disclose his SALN (Statement of Assets, Liabilities & Net Worth) truthfully.

Renato Coronado Corona was born on October 15, 1948 in Tanauan, Batangas. He finished law school at the Ateneo in 1974 and also studied at Harvard and UST. Interesting details in his resume include the following: He served as a special counsel at the Development Bank of the Philippines and later became senior vice-president and general counsel of the Commercial Bank of Manila and later, a senior officer of the Tax and Corporate Counseling Group of the Tax Division of SGV & Co.

The mere mention of banks and SGV gives me the image of a Balance Sheet (or Statement of Assets, Liabilities & Net Worth) for this is the basic tool of finance talk. Accounting is the business language and I’m sure that, contrary to his claim of not knowing assets and debits, he was thoroughly exposed to this language during his stints in these three institutions.

During this time, I guess he never imagined, probably not in his wildest dreams, that he would later be stripped off his power in a well publicized five month long saga due to his inability to truthfully declare his SALN.

Such is the power of the SALN. When not respected, it can kick out the highest official of the judiciary, or even the highest official of the land, for that matter. Once signed, it gives the power to the Ombudsman to look into your assets.

The positive power of SALN

But the SALN can also be our ally. It does not only have the power to guard the citizens from the abuses of government officials but also has the power to help us, ordinary citizens, in improving our financial condition.

I have been advocating the preparation of SALN or Balance Sheet among all of us, even our children, because of this positive power.

Below are some of the positive powers that a SALN can give us:

1. Preparing our SALN makes us aware where our money goes. Our assets in our SALN give us a record where we spend our hard earned money. At least we won’t be clueless where our wealth is.

2. The SALN gives us a picture of the mix of our assets. We can easily see if we have too much short-term (and usually low earning) assets because of our penchant for risk-free investing. Or it can warn us if we invest too much in long-term assets such as real estate that we lack liquidity and may be in trouble when emergency comes. This mix will guide us in properly allocating our assets so that we maximize our earnings without sacrificing risk and liquidity.

(Just a side comment: I don’t agree with the former CJ when he said, “Siguradong walang talo at malaki ang kita sa dollars.” I had the privilege of earning in dollars back in the 90s when I held a consultancy job for a USAID project. Dollar deposits earn very low interest rates. Earnings come mostly from peso devaluation. However, for several years now our peso has strengthened vis-à-vis the dollar that it’s not very wise to keep bulk of your investments in dollars, unless you have dollar needs and of course if you don’t want to declare them in your SALN and believe that you can use the FCDA secrecy law.)

3. The SALN allows us to manage our liabilities. If we see that we are highly leveraged (i.e. we have a lot of debts) and there is no proper matching between our assets and liabilities (for example we are financing long term assets with short term debts) then we can be prompted to do something about it.

4. The SALN makes financial goal setting easier. Keeping records will allow us to track our progress.

5. The SALN has the visual power of a picture. A Balance Sheet is a snapshot of one’s financial condition and a picture aids us and our children in understanding abstract concepts such as money.

6. The SALN motivates us to save and invest. Saving and investing are essentially delaying gratification. When we see our assets growing, we derive some form of gratification and it encourages us to pursue our saving and investing programs.

7. The SALN provides married couples a tool to know their financial condition and facilitates disclosure of sensitive matters such as money.

8. Preparing our SALN periodically prepares us well, should we end up holding a public office in the future.

Having our SALN gives us the power to know exactly where we are financially and helps us get to where we want to take our financial condition.

I dream of the time when most Filipinos will be so financially aware that they know their Net Worth the way they know their other important numbers such as their height, weight, waistline, blood pressure, etc. This will help us realize that financial progress we have been dreaming of. Let’s remember that the financial prosperity of our nation depends upon the financial prosperity of each Filipino.

Now, let’s all start preparing our SALN!