Mr. Diesel and the original biofuels

Mr. Diesel and the original biofuels.

By Abdel Aziz Dimapunong (Abdel Azish Dimapunung)

Biodix biodiesel consultant

There cannot be a complete discussion on biofuels and biodiesel without mention of Mr. Rudolph Diesel, the inventor of diesel engine and a biodiesel user and visionary.

And when we speak of blending one form of engine fuel like gasoline with another kind like ethanol, or fossil diesel with biodiesel, we have to learn from another inventor and pioneer of blending fuels, Mr. Fairbanks and his associate Mr. Morse.

Speaking of further development of the diesel engine, we can not overlook Ford, Cummins and Benz.

Looking back at these pioneering scientists and their remarkable inventions in our search for alternative renewable energy, we realize that we are actually going back to the 19^th century. We are not moving forward. History is just repeating itself after more than a century.

Mr. Rudolph Diesel (1858-1913)

The development of the diesel engine by Mr. Rudolph Diesel runs parallel with the use of biofuels. The diesel engine actually began using biofuels until it was replaced by fossil fuels. Now, therefore, we should not find it hard to get back to biodiesel as used by the inventor himself. As we look back to history, we find that it was global politics that relegated biofuels to the background. The story of Diesel and his diesel engine is the technical aspect of the history of biofuels.

Mr. Rudolph Diesel was born to the era of the steam engine. As a scientist, Rudolph Diesel developed a theory that revolutionized the engines of his day. Diesel invented the diesel engine that was named after him. This has been the perfect internal combustion engine in the sense that the fuel burns inside the chamber by air which is compressed to such a degree that there is an extreme rise in temperature. It does not need a lighter such as the spark plug. When fuel is injected into the piston at top dead center with the highly compressed air, the fuel is ignited by the air itself, firing the piston like a canon. Diesel designed his engine in response to the heavy resource consumption and inefficiency of the steam engine of his time. The steam engine was rated at only 12% efficiency.

On February 27, 1892, Diesel filed for a patent at the Imperial Patent Office in Germany. His application was granted for a Working Method and Design for Combustion Engine. With contracts from machine manufacturers, Diesel began building working models of his engine. In 1893, the first model ran under its own power and it was rated with 26% efficiency. This was remarkable because the rating was more than double the efficiency of the steam engines that were in use. Finally, in February of 1897, he ran the first diesel engine suitable for practical use, which operated at 75% efficiency.

In 1898, Rudolph Diesel demonstrated his engine at the Exhibition Fair in Paris. This engine stood as an example of Diesel’s vision because it was fueled by peanut oil – the original pure vegetable oil (PVO) which we now call biodiesel. He thought that the utilization of PVO was the real future of his engine. That is why when we start to use PVO again, we are actually following the visions of Mr. Diesel. He hoped that it would provide a way for the smaller industries and the farmers a means of competing with the monopolizing industries. Just like what we strive for today, Mr. Diesel look at his diesel invention as an alternative for the then existing fuel consumption. Our version of today’s alternative is to replace an existing fossil fuel with a renewable pure vegetable oil (PVO).

As a result of Diesel’s vision, compression ignited engines were powered by vegetable oil until the 1920’s. Today, as we try to get back to biodiesel, we are actually driving ourselves back to that era of discovery. We now wish to power our engines with biodiesel again. I should think we should call it rediscovery.

The early diesel engines were so heavy for many technical reasons. First, the cylinder of a diesel engine was naturally longer because piston displacement requires it in order to have more compression. Second, the diesel engine was heavy because of the size of the fuel injection pump. They were not really suitable for motor vehicles. Their market was for stationary use such as power for industrial and shipping in the early 1900’s. Ships and submarines benefited greatly from the efficiency of this new engine, which was slowly beginning to gain popularity.

Rudolph Diesel disappeared in 1913. There were controversies and some questions about his death. Some think it might have been accidental or even a suicide. That’s what I believed in. However, others considered a possible political motivation. Whether by accident, suicide or murder, the world had lost a brilliant scientist and biofuel visionary.

Thaddeus Fairbanks

The idea of blending gasoline with a certain percentage of another kind of fuel such as ethanol had actually been considered by the Thaddeus Fairbanks. Yet it now appears to be an innovation, some kind of a new technology.

Fairbanks, Morse & Company had its beginning in 1823 when inventor Thaddeus Fairbanks began his business in ironworks. Fairbanks was the leading manufacturer in the United States during his time. He was the best known in the whole world until he was overshadowed by the rise to popularity of Henry Ford.

Fairbanks and Morse began producing oil engines in the 1890s. We can say that Fairbanks was a contemporary of Mr. Diesel. While Diesel was working on diesel engines, Fairbanks was also working on kerosene engines. The Fairbanks and Morse gas engine was widely accepted by farmers. It was used mainly for irrigation and electricity generation. It was also used for oilfield work.

In summary, Fairbanks and Morse power plants evolved by burning kerosene in 1893, then to semi-diesel engines in 1913 and to full diesel engines in 1924.

Fairbanks and Morse Model Z engine

(Blending gasoline with kerosene)

In 1916 the company began production of the Model Z single cylinder engine in one, three and six horsepower sizes.

From 1916 to 1946, Fairbanks and Morse produced over half a million units of Model Z. That was a period of 30 years. In our estimate, about fifty thousand of these units found their way to the Philippine Islands. Most of the units were probably brought into the country by the United States army during World War II. More than a dozen of these units found their way in 1960 to our shed in Lanao Del Norte, Mindanao. My father collected them as a matter of hobby. We excavated most of them from where they were abandoned. Some of them were bought by my father “por kilo” a way of buying steel based on its weight. As I will explain later, this is the first engine that uses a blend of fuels.

After the expiration of Rudolph Diesel’s of license in America in 1912, Fairbanks entered the large engine business. As noted earlier, Mr. Diesel died in 1913. Fairbanks and Morse took over the development of the diesel engine. The company’s larger Model Y semi-diesel became a standard engine of its time. The model Y was available in sizes from one through six cylinders.

The Y-VA Fairbanks engine was the first high compression using full diesel. This machine was developed in Beloit and introduced in 1924.

Fairbanks and Morse continued to build diesel and gas engines. Export offices were established in Rio de Janero and Buenos Aires. The model Z engines were built into the 1970s in Mexico. An Australian branch factory, similar to the Canadian Branch operation, was also opened. Many Fairbanks engines dutifully served into the late twentieth century,

Henry Ford into diesel

As noted earlier, Fairbanks was the best known in the whole world until the rise of Henry Ford in the car industry. But this popularity had to do with the idea of the assembly line of production. And it had to do with the popularly known Ford Model T. Early American Ford automobiles were not diesel driven, but they were powered by ethanol. Yes, this is the ethanol that we are now considering for rediscovery. This is the ethanol that is provided for in the Philippines Biofuel of 2000.

Henry Ford shared a similar vision with Rudolph Diesel. He believed that pure vegetable oil should the fuel of the transportation industry. In a partnership with Standard Oil, he helped developed the biofuel industry. But ethanol disappeared from the scene as a result of the development of the petroleum industry.

Cummins, a diesel engine mechanic inventor

It was Clessie L Cummins, a mechanic-inventor who actually worked on the design problems of the diesel engine. The problems of diesel engine at that time had to do with the size and weight. There was also the issue on the instability created by its fuel system. In 1919, Cummins developed a single disk system that measured the fuel injected. Like the other early engines, Cummins’ products were stationary engines and his main market was the marine industry.

It was also during the 1920’s that diesel engine manufacturers created a major challenge for the biofuel industry. Diesel engines were altered to utilize the lower viscosity of the fossil fuel residue rather than a biomass based fuel. The petroleum industries were growing and establishing themselves during this period. Their business tactics and the wealth that many of these oil tycoons already possessed greatly influenced the development of all engines and machinery.

It was in the 1920s that the alteration to the original engines was first introduced as a step in the elimination of the production structure for purely vegetable oils. It was also a step in forcing the concept of biomass as a potential fuel base into obscurity, erasing the possibilities from the public awareness.

In 1929, the Stock Market crashed. This brought the threat of bankruptcy to Cummins. In an innovative move, however, he installed a diesel engine in a limousine and took his backer, Irwin, for a ride, assuring further investment. Cummins continued to experiment with the diesel motor vehicles.

In 1931, Cummins set a speed record and distance record by driving a truck with a Cummins diesel engine coast to coast in the United States. With this distance, Cummins established an endurance record of 13,535 miles at Indianapolis Speedway. Cummins’ diesel engines were then established and trucks as well as other fleets began using them. Over the years, Cummins has continued to improve the efficiency of the diesel engine, providing technological innovations. Their engines have set a high standard for the industry.

The Mercedes Benz diesel engines.

The 1920’s brought a new injection pump design, allowing the metering of fuel as it entered the engine without the need of pressurized air and its accompanying tank. The engine was now small enough to be mobile and utilized in vehicles. In 1936, Mercedes Benz built the first automobile with a diesel engine. These were dependable, enduring automobiles that lasted well into the second half of the 20^th century.

The oil crisis

The 1970’s arrived and the riding public, who were firmly dependent on foreign oil, yet, unaware of the depth of their dependence, were suddenly faced with a crisis.

In 1973, OPEC, the Middle Eastern organization controlling the majority of the world’s oil, reduced the supply of oil and raised the price, sending the United States and other countries into a crisis. Long lines at pump stations started to appear. I was among them. I remember the gas ration system. This crisis was recreated in 1978. Long lines became more longer at the gas pumps. People panicked as they realized that they depended on the consistent supply of oil – foreign oil. Conservation and alternatives became important.

Because of the oil crisis, the riding public looked to diesel fuel which was more efficient and economical and they began buying diesel-powered automobiles. These automobiles include the Mercedes Benz, Isuzu Volkswagen, plus a good portion of Audi, Volvo and Datsun during the 1970’s. For the first time, American manufacturers began producing automobiles with diesel engines. General Motors made and sold diesel automobiles in the late 1970’s, accounting for 60% of all diesel sales in the United States. This surge of diesel only started to decline in the 1980’s when the price of oil had been re-stabilized. Along with this, the automobiles produced by General Motors were basically converted gasoline engines.

No war for oil

As we entered the 21st Century, we had become conscious of and focus on our environment, clean air, the greenhouse effect, and pollution. It has become fashionable to speak of alternative energy, renewable energy, bioethanol, biodiesel, and many kinds of biofuels. Laws were passed in many countries. Nations discussed oil supply and the reduction of dependence on fossil fuel.

Then came the Iraq War. On March 20, 2003, the United States and it allies invaded Iraq. There was debate on the reason why was erupted. Was it because of the so-called Weapons of Mass Destruction? Was it because of oil? Looking forward to the future, our dependency on foreign oil and its rising prices as well as probable instability due to conflicts that could lead to more wars will drive us to explore alternatives with more open minds.

 

Biodiesel at PHIVIDEC ?

 

Biodiesel at PHIVIDEC?

By Abdel Aziz Dimapunong

(Abdel Azizh Dimapunung)

Biodix biodiesel consultant

I had been asked last month to locate for an industrial site for ERA’s Biodix in the Philippines. Biodix is a brand of biodiesel products that will be produced from pure vegetable oil (PVO). It also refers to a joint venture between ERA Petroleum and the Amanah Islamic Bank that is pushing for biodiesel production using a specific technology and a dispersed strategic production and processing. I understand that Biodix has also a European component that employs biodiesel technology. The group has developed an innovative process technique with which biodiesel easily can be made out of PVOs such as coconut and palm oils.

With the group’s technology biodiesel can be used as a 100% substitute for mineral fuel. That is internationally known as B-100. It can also be blended in any ratio with fossil diesel in all diesel engines, without hardly any adjustments to the fuel system.

Biodix can come up to the expectation of the Philippine government as enunciated under the Biofuels Act of 2000. Under Section 3 of this law are the following definitions, among others that relate to Philippine National Standards on biofuels.

– Biodiesel shall refer to Fatty Acid Methyl Ester (FAME) or mono-alkyl esters derived from vegetable oils or animal fats and other biomass-derived oils that shall be technically proven and approved by the DOE for use in diesel engines, with quality specifications in accordance with the Philippine National Standards (PNS);

– Biofuel shall refer to bioethanol and biodiesel and other fuels made from biomass and primarily used for motive, thermal and power generation, with quality specifications in accordance with the PNS;

– Diesel shall refer to refined petroleum distillate, which may contain small amount of hydrocarbon or non-hydrocarbon additives to improve ignition quality or other characteristics, suitable for compression ignition engine and other suitable types of engine with quality specifications in accordance with the PNS;

– Feedstock shall refer to organic sources such as molasses, sugarcane, cassava, coconut, jatropha, sweet sorghum or other biomass used in the production of biofuels;

– Motor fuel shall refer to all volatile and inflammable liquids and gas produced, blended or compounded for the purpose of, or which are suitable or practicable for, operating motor vehicles;

– Oil Company shall refer to any entity that distributes and sells petroleum fuel products;

– PNS – shall refer to the Philippine National Standards; consistent with Section 26 of R.A. No. 8749, otherwise known as the “Philippine Clean Air Act of 1999”;

– Renewable Energy Sources shall refer to energy sources that do not have an upper limit on the total quantity to be used. Such resources are renewable on a regular basis.

The Philippine’s Biofuels Act of 2006 has been signed into law during the recently concluded Asean Summit that was held in the city of Cebu, Philippines. The law is now in effect. With this law, the Philippines is now committed to reduce dependence on imported fuels. Under Section 5, it is now mandatory that all liquid fuels for motors and engines sold in the Philippines shall contain locally-sourced biofuels components. All diesel fuels in the local market shall contain at least one percent biodiesel. This will gradually increase as per the schedule under the law. By 2010, the local market for biofuels could reach about US$420 million.

The Philippines imported 91.471 million barrels of crude oil last 2003 and 37.04 million of oil products. The country’s oil import bill last 2005 amounts to US$ 4.1 billion. According to Index Mundi the oil imports of the Philippines in year 2003 were recorded at 312,000 bbl/day. The target of the Biofuels Act is to replace these oil imports in Toto at a certain point in time.

Last January 14, 2007, the Asian and Pacific leaders also signed in Cebu City, Philippines an agreement to promote the use of biofuels. The Cebu Declaration on East Asian Energy Security was signed by leaders from Southeast Asia, Australia, New Zealand, India, Japan, China and South Korea after a three-hour summit in Cebu. The agreement aims for reliable, adequate and affordable alternative energy. The declaration calls for improved energy efficiency that will reduce dependence on traditional fossil fuels. It is urging countries to expand renewable energy systems and biofuel production.

On the Biofuels Act of 2006, the salient features are (1) the mandatory use of biofuels under Section 5, and (2) the provisions of a number of incentives under Section 6.

Under its mandatory provisions, all liquid fuels for motors and engines sold in the Philippines shall contain locally-sourced biofuels components in accordance with a schedule under Section 6. The incentives also include exemption from specific tax on local or imported biofuels component. On financing, the Biofuels Act also provides that government financial institutions shall accord high priority to extend financing to Filipino citizens or entities that shall engage in activities involving production, storage, handling and transport of biofuel and biofuel feedstock.

The Musfil Chamber of Agriculture

In the production of biofuels, the Philippines envisions to use renewable raw materials from the agricultural sector such as but not limited to, coconut, jatropha, sugarcane, cassava, corn, and sweet sorghum. Under the Ten Point Agenda of the Macapagal Arroyo administration, the development of 2 million hectares of agricultural land has been given emphasis. It is on this matter that the Musfil Chamber of Agriculture and Fisheries, Inc. comes into the picture of Biodix. According to the Chairman of the Chamber, Mr. Muamar Badio, it is only their chamber that can readily provide such a wide tract of land from the private sector. “The members of the Chamber can easily produce that much from the Autonomous Region in Muslim Mindanao”, he said.

In accordance with the primary purposes of the Chamber of Agriculture as stated in its registered Articles of Incorporation, the chamber has already organized a landholding estate of 1 million hectares of which it now holds Land Titles, under various “Trust Instruments”, constituting of some 500,000 hectares.

The Muslim Filipino Chamber of Agriculture and Fisheries, Inc., the MUSFIL Chamber for short, is a non-governmental organization duly organized and registered with the Securities and Exchange Commission in the Philippines on March 22, 1988 with registration no. 149706.

When it was organized, the Chamber was initially composed of few farmers and landowners headed by Datu Muamar Badio and Solaiman Malambut of Lanao Del Sur. Soon the membership expanded to the provinces of Lanao Del Norte, Maguindanao and Cotabato. By 1990 membership to the chamber counted more than a hundred. In 1995, the chamber expanded its member qualifications to include not only individuals but institutions such as duly organized cooperatives and foundations. By the year 2000, the Chamber counted members from civic groups, cooperatives, associations, foundations and private voluntary organizations.

The members who actually hold land titles that are transferred to or managed by the Chamber of Agriculture under Trust Instruments have now reached five thousand. The areas of landholdings of the Chamber, in the name and on behalf of the members, have now reached 500,000 hectares. That is an average of 100 hectares per individual/cooperative members. The Chamber now focuses its development in the areas of renewable energy, more particularly biofuels from biodiesel.

PHIVIDEC

About my recommendation for the location, I did not think twice. I have submitted last month our recommendation for PHIVIDEC Industrial Authority as the site for Biodix facilities. When Ashroff Gaffoor, President of ERA Petroleum, called me last week, I was told that my earlier recommendation for PIA was accepted by their Board of Directors.

My engagement with ERA Petroleum gives me the opportunity to revisit the PHIVIDEC Industrial Estate. It was an opportunity for me to go and stroll down memory lane. In my younger days as a junior executive, I was connected as an officer of the PHIVIDEC group which used to be composed of many corporate entities under the umbrella of the Philippine Veterans Investments Development Corporation. It was in this mother company where I was appointed back in 1980 as Manager and Assistant Vice President, Loans and Investments. I left PHIVIDEC in 1983 when I went abroad for a greener pasture.

The Phividec group in our days was composed of high caliber personalities (don’t count me in). To name just a few, our vice chairman then was a general by the name of Fidel V. Ramos. Years later General Fidel V. Ramos became the President of the Republic of the Philippines. Our legal counsel was ACCRA Law Office, composing of lawyers Angara, Abello, Conception, Regala and Cruz. Representing ACCRA who frequents PHIVIDEC was simply known then as Atty. Edgardo Angara. Years later, he became President of the University of the Philippines, and later twice Senator of the Philippines. Our president then was known to his peers in PHIVIDEC as “the man in a hurry”, Mr. Jorge Salazar. He has become a successful entrepreneur. About me as then manager and assistant vice president for loans and investments; well I became more of me.

PHIVIDEC was organized under Presidential Decree No. 243, as amended by P.D. Nos. 353 and 918 on December 26, 1973 in line with the Philippine Government’s objective of effecting the desired changes and reforms in the social economic structures of Philippine society through the full utilization of the productive capacities of veterans and retirees of the Armed Forces of the Philippines. Under the law, PHIVIDEC is exempt from payments of any and all taxes, duties, charges, fees and assessment of whatever nature and description imposed by any authority, whether national or local.

The PHIVIDEC Industrial Authority (PIA) was among the many subsidiaries of the Philippine veterans Investments and Development Corporation. The others were the Veterans Electronics Communications Inc. and PHIVIDEC Electronic Components and the PHIVIDEV Construction and Development Corporation.

As for the PHIVIDEC Industrial Authority, it has been 33 years since its inception. It was created by Presidential Decree No. 538 on August 13, 1974, making it a subsidiary agency of PHIVIDEC. PIA is a government corporation vested with special powers to establish, develop, administer and operate industrial areas and the ports and utilities inside such areas. The objective has been aimed at faster development in Northern Mindanao and to pursue the Government’s policy to disperse industries.

The Phividec Industrial Authority (PIA) is fully-owned and controlled by the Government of the Republic of the Philippines. In 1985, Executive Order No. 1031 provided for the constitution of a PIA Board of Directors separate and independent from the PHIVIDEC.

As mandated by its Charter, PD 538, the PIA identifies and develops sites in the country as prospective industrial areas. The PIA equips these areas with the necessary infrastructures to encourage the inflow of domestic and foreign investments. The PIA is empowered to assess and collect real property taxes and port fees; collect lease rentals; issue permits and licenses.

 

In 1994, the Philippines Government designated the PIE-MO as the showcase of its industrial flagship program in Northern Mindanao, the Cagayan de Oro Iligan Special Development Project.

The Northern Mindanao region heavily relies on PIE-MO for its capital infusion. In 1996 alone, for instance, 98 percent of new industrial capital flowing into the province of Misamis Oriental came by way of the PIE-MO, easily surpassing investments approved by the Board of Investments for the province and that infused in the entire Cagayan de Oro-Iligan Corridor. Thus it comes as no surprises that the Philippine Government continues to look at PIE-MO as the entity which shall spearhead sustained industrial development in Northern Mindanao.

The Physical layout of the estate. The PIE-MO is divided into five industrial parks, as follows

 

Industrial Park I. This is now fully occupied by renowned companies including the Ferrochrome Philippines, Inc., Pacific Activated Carbon Co., and Lina Holdings Oleochemicals Inc. The Mindanao Container Terminal Project (MCTP) is also located in this park.

 

Industrial Park II. Park II is available for clean, general, light and special industries. Major industries that are in this park include Metro Paper and Packaging Products, Inc., Southern Industrial Gases, Inc., and Boom Marine Corporation.

 

Industrial Park III. This site covers 200 hectares of flat land. This is the site of Itochu Corporation’s Coresteel Industries Philipinas, Inc., and Pryce Gases, Inc. Park III is also approved for clean, general, and light industries.

Industrial Park IV. This Park is situated along the three plateaus of Kiamo and Kirahon. It is the site of the 200-hectare First Cagayan De Oro Business Park which can accommodate clean, general and light industries.

Industrial Park V. This Park is the site of the 150-hectare Philippines Sinter Corporation, a subsidiary of the Kawasaki Steel of Japan and the Proposed 475-hectare Philippine Integrated Steel Project of the Jacinto Metals Corporation.

The industries which might be brought inside the PIA estate are generally classified as follows:

CLEAN INDUSTRIES. These are Industries whereby the processes employed do not result in noise vibration, smell, fumes, smoke, soot, ash, and other effects detrimental to residential areas.

LIGHT INDUSTRIES. These are similar to clean industries, except that distance between these industries and residential areas must be at least 50 meters. These include research and development entities involving small quantities of chemicals.

GENERAL INDUSTRIES. These are industries whereby processes and the use of machineries can be carried out within an approved 100-meter buffer between industrial and residential areas. These include metal stamping, manufacturers of metal drums, containers, dry cells and batteries, and detergents

SPECIAL INDUSTRIES. These are industries that give rise to excessive air, water and noise pollution and solid waste problems which are offensive and dangerous. They require environmental clearances and must be located at distances of 0.5 to 1 km from residential areas. These include refineries for oil and sugar, brewery, iron, and steel manufacturing/fabrication plants. It is in this category that the Biodix group is coming in.

In terms of classifications, PIE-MO considers as large those which are capitalized at over Pesos 60 million; Medium if the capital is Pesos 50 million up to Pesos 60 million; and light if the capital falls within the range of Pesos 1.5 million to Pesos 15 million. By this classification, Biodix is coming in as among those in the scale of large industries.

The first industrial area administered by PIA is the 3,000-hectare PHIVIDEC Industrial Estate in Misamis Oriental (PIE-MO). In 1994, the Philippine Government under the administration of President Fidel V. Ramos, former vice chairman of PHIVIDEC designated PIE-MO as the hub and showcase of its flagship program for industrialization in Northern Mindanao.

Coming back to ERA Petroleum Company and the Amanah Islamic Bank. The two companies have already inked a joint venture agreement that is known as Biodix Biodiesel J.V. Would its biodiesel refinery rise at PHIVIDEC?

In defense of Gaffoor And Dianaton

In defense of Gaffoor and

Dianaton of

Amanah Islamic Bank

By Abdel Aziz Dimapunong

(Abdel Azish Dimapunung)

Chancellor, Islamic Banking Research Institute

Founding Chairman

Amanah Islamic Bank (1992-1998)

 

Some stockholders of the Islamic bank sent me email messages about malicious postings in a certain website related to a perennial complaint of a certain Engr. Farouk Carpizo. The complainant already died several years ago but his postings on the Internet are still there, forcing his victims to respond – not to him who is dead but to his postings which are still live on the Internet. I received this same kind of email from Ashroff Gaffoor who requested me to present my comments on the issues. I am obliged to make a response on behalf of the respondents by the fact that I was founding chairman of the Amanah Islamic Bank.

This article is based on the results of the investigation of the Department of Justice on a complaint that it received docketed as I.S. No. 99-1806. As the I.S. number indicates, this pertains to a complaint in 1999, or seven years ago. The complaint was filed by certain former lawyers of the Bangko Sentral ng Pilipinas (BSP), Atty. Rolando A.Q Agustin and Atty. Rosalina P Ojascastro as allegedly representing the Monetary Board. The filing of the complaint was based on the original complaint by Farouk Carpizo.

The BSP lawyers just did their job upon receipt of an original complaint that was maliciously filed with the Central Bank by Carpizo. Upon my research, I found that the lawyers of the Bangko Sentral filed the case wrongfully. They filed the case in the name of the Monetary Board but without the consent of the latter. They had no authority to represent the Bangko Sentral ng Pilipinas on legal matters. Under Section 18, par (c) of the new Central Bank Act, R, A. 7653, it is the Governor of the Bangko Sentral ng Pilipinas who is authorized to represent the Bangko Sentral in any legal proceedings, action or specialized legal studies.

On their affidavits, the BSP lawyers had to confess that they were not authorized by the Monetary Board. They were only acting on their own. That was a fatal mistake because they misrepresented the Monetary Board and the Bangko Sentral. Not having been authorized, the case cannot bind the Monetary Board and the Bangko Sentral.

 

The Islamic Banking Research Institute of which I am the chairman has complete files related to the investigations of the Department of Justice on this case. The Institute is being updated by the incumbent chairman of the Amanah Islamic Bank, Mr. Grande M. Dianaton, original stockholder of the old Philippine Amanah Bank and one of the founding stockholders of the Al Amanah Islamic Investment Bank of the Philippines.

First, who was Farouk Carpizo? Who was this man who posted malicious statements on the Internet? I shall not speak about him except that he died some years ago. I knew this because he was my neighbor. The fact the he died already is a good reason not to perpetuate his complaint. But somebody is still hosting his malicious postings on the Internet.

I shall limit myself to what official records have to show about Engr. Farouk Carpizo.

The following is the legal story based on the files of the Amanah Islamic Bank and the Department of Justice of the Philippines.

Seven years after we had formally organized the Islamic Bank in accordance with its charter, R.A. 6848, the Supervision and Examination Department of the Bangko Sentral ng Pilipinas (BSP) was misinformed by one Engr. Farouk Carpizo. Sometime in 1999, he represented himself to the BSP as a government representative. In truth, as the records show he was president of the old abolished Philippine Amanah Bank (PAB) – not the new Al Amanah Islamic Investment Bank of the Philippines. He claimed that the Islamic Bank is a government bank of which he is the president, representing the government. And he further charged Grande Dianaton, Ashroff Gaffoor and some of the directors of the private Islamic Bank as bogus!

Based on hearsay, the BSP lawyers filed a formal complaint allegedly in the name of the Monetary Board against Grande Dianaton, Ashroff Gaffoor and some directors and officers of the original Islamic Bank. Bad publicity in the press and the Internet was made, and investigation was conducted by the Department of Justice. What a waste of time! All the charges were maliciously manufactured. These false charges are the ones that were posted on the Internet.

The complainant charges those innocent officers as bogus – but actually it was he and his group who were the real bogus.

At this point, it bears relevance to introduce the complainant, Engr. Farouk Carpizo based on records of no less than the Hon. Supreme Court of the Philippines.

As I have said, I shall not personally comment on the person of Farouk Carpizo who is already dead but whose postings are still live on the Internet. I will only quote the Honorable SUPREME COURT of the Philippines from a DECISION involving one Engr. Farouk Carpizo.

BEGIN QUOTE FROM SUPREME COURT

(In this case, the Supreme Court speaks through the Hon. Justice of the Supreme Court, Justice Hilarion Davide, Jr. who penned the following Supreme Court Decision about the same Engr. Farouk Carpizo as being “bogus”, who represented a “fake Board”)

“It must be pointed out that two groups had earlier vied for control of the IDP, namely, (1) the Carpizo group headed by Engr. Farouk Carpizo [Underscoring supplied]…Nevertheless, on 20 April 1989, the Carpizo group caused the signing of an alleged Board Resolution authorizing the sale of the two parcels of land mentioned above to private respondent Iglesia ni Cristo (hereafter INC).

“If the SEC can declare who is the legitimate IDP Board, then by parity of reasoning, it can also declare who is not the legitimate IDP Board. This is precisely what the SEC did in SEC Case No. 4012 when it adjudged the election of the Carpizo Group to the IDP Board of Trustees to be null and void. By this ruling, the SEC in effect made the unequivocal finding that the IDP-Carpizo Group is a bogus Board of Trustees. [Underscoring supplied] Consequently, the Carpizo Group is bereft of any authority whatsoever to bind IDP in any kind of transaction including the sale or disposition of IDP property.

xxx xxx xxx

“. . . Nothing thus becomes more settled than that the IDP-Carpizo Group with whom private respondent INC contracted is a fake Board. [Underscoring supplied]

xxx xxx xxx

“… For the sale to be valid, the majority vote of the legitimate Board of Trustees, concurred in by the vote of at least 2/3 of the bona fide members of the corporation should have been obtained. These twin requirements were not met as the Carpizo Group which voted to sell the Tandang Sora property was a fake Board of Trustees [Underscoring supplied], and those whose names and signatures were affixed by the Carpizo group together with the sham Board Resolution authorizing the negotiation for the sale were, from all indications, not bona fide members of the IDP as they were made to appear to be. . . .

All told, the disputed Deed of Absolute Sale executed by the fake Carpizo Board [Underscoring supplied] and private respondent INC was intrinsically void ab initio.

[G.R. No. 127683 August 7, 1998, LETICIA P. LIGON, petitioner, vs. COURT OF APPEALS and IGLESIA NI CRISTO, respondents.]

UNQUOTE

Going back to the case of Ashroff Gaffoor and Grande Dianaton versus Farouk Carpizo and the BSP, the following surfaced:

1. Owing to its fiscal crisis that closely approaches the Nicaraguan syndrome, the Philippine government has never subscribed to the capital stock of the new Amanah Islamic Bank.

 

2. The two BSP lawyers who filed the case had to confess upon investigation that they had no authority to file the case from the Monetary Board. That was an act of misrepresentation.

 

3. The two BSP lawyers did not know also that there was already an earlier Resolution by the Honorable Supreme Court of the Philippines on the same case complained about.

4. They charged Dianaton, Gaffoor and Mangompia for violation of Republic Act No. 337 – not knowing that this was a non-existing law at the time of the filing of the case. That was the old Central Bank Act which was enacted in 1948!

 

In summary the complaint was based on hearsay that was loaded with errors and falsity.

 

This story is not a fiction. The statements are facts of a malicious and baseless complaint (Department of Justice, I.S. No. 99-1806) filed by two misinformed BSP lawyers against innocent officers of the new Amanah Islamic Bank. They not only misrepresented the Monetary Board but they also misrepresented the Office of the President of the Philippines. And worst, they are misleading the general public.

 

The following are the facts that were considered by the Department of Justice (DOJ) in its Resolution on the complaint of the Central Bank

BEGIN QUOTING THE DOJ RESOLUTION.

The respondents, “as summarized, jointly alleges that the complaint-affidavit of the BSP against the respondents for violation of Section 6 of RA 337 in relation to Section 36 of RA 7653, has no basis in fact and in law, based on the following: a) that we are all stockholders and organic directors and officers of the Islamic Bank, a corporation created by RA 6848, and duly organized by most of us with present business development address at No. 3, Block 11, Marawi Avenue, Maharlika Village, Taguig, Metro Manila; b) that respondents Mangompia, Badio, Pangcoga, and Rasuman, were among those present as organizers in the organizational shareholders meeting of the Islamic Bank on April 28, 1992 at the Army and Navy Club, Manila, of which the original and authentic Islamic Bank was officially organized in the manner prescribed by law under R.A. 6848; c) that their decision to subscribe to Series “B” shares and Series “C” shares in the capital of the Islamic Bank was based on their knowledge of this legal processes which was sanctioned by the confirmation letter of the SEC which issued a confirmation letter, dated July 29, 1993, that the Islamic Bank is deemed registered and authorized to operate as of the date of approval of RA 6848, and this was further boosted by another confirmation letter, dated September 8, 1993, that the Islamic Bank is exempted from the Revised Securities Act; d) that the legality of their being stockholders of the Islamic Bank is even supported by the Hon. Court of Appeals in its Decision on Civil Case No. CA GR No. 28445 entitled Abdel Aziz Dimapunong v. Hon. Zosimo Z. Angeles where on page 6, par. 2 the Hon. Court states that “ there is no question that the other petitioners, Abbas, Dianaton, and Malambut, are stockholders of the bank”. Abbas and Malambut were among their predecessor directors while Dianaton is still a director; e) that the legality of their being stockholders of the Islamic Bank is also supported by the Office of the Solicitor General in its Motion and Manifestation dated September 22, 1992; f) that a careful reading of the complaint of the Monetary Board clearly shows that it is a recycled complaint, the original “Complaint For Injunction with Damages” having been filed by then Finance Secretary Roberto De Ocampo and Farouk Carpizo. This is the same complaint by the BSP officials in the instant case; g) that the complaint alleges without basis that “the legitimate government owned Islamic Bank, which is duly recognized by the Bangko Sentral, is the Al Amanah Islamic Investment Bank of the Philippines (AIIBP) which was created and existing pursuant to the provisions of R.A. 6848, and the majority shares of which are held by the National Government, Social Security System (SSS), Government Service Insurance System (GSIS), Development Bank of the Philippines (DBP), and the Asset Privatization Trust (APT)” In response, we state that this is totally wrong because the shareholdings of the National Government, SSS, GSIS, DBP, and APT refers to their shareholdings in the abolished Philippine Amanah Bank (PAB). These government shareholdings have long been totally worthless because of the total bankruptcy and insolvency of the Philippine Amanah Bank which is now being resurrected by the BSP by usurping the name of our Islamic Bank; h) that the complaint states that certain persons were “nominated by the president of the Philippines and elected in the alleged general shareholders meeting held on June 30, 1999. This is not true, the President of the Philippines did not nominate anyone but in his letter of June 22, 1999, he wrote to DBP Chairman Ramoncito Z. Abad (not to the chairman of the Islamic Bank) expressing ONLY A DESIRE – not a nomination; i) that the complainant should be educated about the charter of the Islamic Bank to discover that we do not have to be under the supervision of the BSP because the Islamic Bank is not just a bank as defined under the General Banking Act but also an INVESTMENT HOUSE”. Should it operate as an investment house, the Islamic Bank is under the supervision of the SEC; j) it must also be noted that the charter provides them exemption from the provisions of the General Banking Act and Central Bank Act. The charter provides the following exemption: “SEC. 39. Non-Applicability of Selected Acts. – In order to achieve the international and domestic objectives of Islamic banking business, the provisions of the following acts and laws shall not apply to the Islamic Bank to the extent as herein rendered inoperative: “(1) The provisions of the Central Bank Act and the General Banking Act with particular reference to the determination of bank interest rates, loans and discounts, and any interest-bearing instruments or charge: provided that nothing contained herein shall be construed to impair the powers of the Central Bank to supervise and regulate the activities of the Islamic Bank.”; k) that the undersigned respondents also question the capacities of Rolando A.Q Agustin and Rosalina P Ojascastro as representing the Monetary Board in the instant legal action. Under Section 18, par (c) of the new Central Bank Act, R, A. 7653, it is the Governor of the BSP who is authorized to represent the BSP in any legal proceedings, action or specialized legal studies; r) Finally, it must be noted that in supervising the Islamic Bank, the Monetary Board shall supervise it in accordance with the Sharia’ Law (Sec. 43, R.A. 6848)

[Pages 7, 8, 9, and 10, DOJ Resolution, on I.S. No. 99-1806, dated February 6, 2001, Manila, Philippines]

 

UNQUOTE THE DOJ RESOLUTION

Photo

The organizational meeting at the Army and Navy Club of Manila

With Grande Dianaton, April 28, 1992

Photo

The 1999 International stockholders meeting at Richmond Hotel

With Ashroff Gaffoor (center)

What happens next?

 

The malicious complaint did not progress. The lawyers were not authorized by the Monetary Board of the Bangko Sentral. They confessed to have acted on their own – not the Central Bank.

How do I see the case? Well, it was a DAC, Dead on Arrival at Court.

 

Hello everyone!

Hi. This is Abdel Dimapunong, Managing Director of Biodix Biodiesel J.V. , a joint venture of ERA Petroleum Company (Hong Kong) and the Amanah Islamic Bank (Philippines). Welcome to Biodix at WordPress.com. This is my first post. Let me just say hello. I will have more to say the next time. I will be blogging about renewable energy. Biodix is about biodiesel. Biodix is a brand of biodiesel product of Biodix Biodiesel J.V.

As Biodix is a Joint Venture of ERA Petroleum and the Amanah Islamic Bank, I will also be blogging about these two companies on corporate matters relating to Biodix, biodiesel and biofuels.

May I express my appreciation to WordPress for having provided me and Biodix this space in Blogosphere.

Thank you

Yours truly,

Abdel Aziz Dimapunong (Abdel Azish Dimapunung)

Managing Director, Biodix Biodiesel J.V.