Lucio Tan can merge PNB and Allied Bank
MANILA, Philippines - The Presidential Commission on Good Government (PCGG) has no authority to stop a planned merger between the Philippine National Bank (PNB) and Allied Banking Corp. (Allied Bank).
This was declared by the Department of Justice (DOJ) in a four-page legal opinion it recently issued upon request of Finance Undersecretary John Phillip Sevilla.
Sevilla sought the legal opinion after the PCGG sent letters to the Securities and Exchange Commission (SEC), Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corp. (PDIC) urging that they deny any merger application by PNB and Allied Banking Corp., which are both owned by business tycoon Lucio Tan.
The PCGG has been opposing the union of the two commercial banks, saying the merger would render government efforts to recover a portion of Tan’s allegedly ill-gotten wealth moot and academic.
It earlier filed a temporary restraining order (TRO) before the anti-graft court Sandiganbayan to stop the merger on the basis of Executive Order (EO) 2, which gives the PCGG the authority to prohibit any person from transferring, conveying, encumbering or otherwise depleting or concealing assets and pieces of property in which the family of late former President Ferdinand Marcos and its allies have interest or participation.
But Justice Secretary Leila de Lima said the provision should not be construed “as delimiting the mandates” of SEC, BSP and PDIC where approving or disapproving application for merger by PNB and Allied Banking Corp. is concerned.
According to de Lima, the PCGG has lost legal basis to assume control over shares of stock of Tan at Allied Banking Corp. considering that its writ-sequestration orders over the shares were already declared void by the Sandiganbayan. The declaration was later upheld by the Supreme Court.
The DOJ chief said the Sandiganbayan has ruled that under Section 80 of the Corporation Code, the liabilities, obligations and actions against the merged corporations are not erased.
De Lima added that the anti-graft court issued a ruling on June 11, 2012 stating that Tan’s assets are not part of the ill-gotten wealth of the Marcos family.
“Thus, paragraph 2 of EO 2 should not be construed as precluding the concerned agencies in pursuing their mandates under their respective charters. To do otherwise and not act on the same may even result in suits against them by involved parties,” she said.
De Lima, however, clarified that the DOJ would have to defer to evaluation of SEC, BSP and PDIC on whether to approve or disapprove the merger application of PNB and Allied Banking Corp.
The justice secretary said the three agencies have jurisdiction to decide over the subject matter.
“This view arises not only from practical considerations but also out of due respect and deference for the competence and expertise of the agencies concerned having the primary jurisdiction to decide on the matter at hand,” de Lima added.
Tan’s camp earlier asked the PCGG to keep its hands off the assets and pieces of property of the businessman, citing the June 11, 2012 ruling of the Sandiganbayan.
Despite several decisions previously issued by the anti-graft court and the Supreme Court, Tan’s lawyer Estelito Mendoza said, the PCGG “continues to limit” his client’s exercise over his assets and pieces of property.
Mendoza added that PCGG is opposing the merger because the shares of stock of Tan at Allied Banking Corp. are among the allegedly ill-gotten wealth of the Marcoses under Civil Case 0005.
“The dismissal of the ill-gotten-wealth complaint by the Sandiganbayan instituted by the PCGG in 1987, after nearly 25 years of litigation before the Sandiganbayan, should put to rest any claim that the assets of Lucio Tan have been acquired through illegal means,” Mendoza said.
In 1993 and 2006, the anti-graft court nullified the writs of sequestration of those shares on the ground that there was no prima facie basis to consider them as ill-gotten wealth.
The nullification was affirmed by the Supreme Court in 1996 and 2007.
On June 11 the Sandiganbayan’s Fifth Division junked a petition filed by the government, through the PCGG, to forfeit Tan’s assets for lack of evidence.
It held that the government failed to show proof that Tan’s vast wealth was part of the allegedly ill-gotten wealth of the Marcos family.
The Sandiganbayan said the case failed to pass the “ill-gotten-wealth” test, which means that the government should have established the “improper or illegal use of or conversion of funds belonging to the government of the Philippines.”