What Went Before: The sale of gov’t stake in Meralco to Global 5000

In December 2008, three government institutions agreed to sell their combined 10-percent stake in Manila Electric Co. (Meralco) to Global 5000 Investment, an investment fund led by businessmen Iñigo Zobel, former Trade Minister Roberto V. Ongpin and condiments king Joselito Campos, for P9.9 billion.

The state-run Social Security System (SSS), Land Bank of the Philippines and Development Bank of the Philippines (DBP) signed a memorandum of agreement to sell about 110 million shares in the power utility to Global 5000 on Dec. 2, 2008.

Global 5000 agreed to pay for the combined 10-percent stake in Meralco held by the SSS, DBP and Landbank in installments until January 2012.

The shares were not to be crossed at the Philippine Stock Exchange (PSE) until full payment. Nevertheless, Global 5000 acquired the proxy votes immediately.

The sale was deemed significant in the power struggle in Meralco then as the investment fund group was widely perceived as “allied” to San Miguel Corp., which in October 2008 bought the 27-percent Meralco holdings of another state-run pension fund, the Government Service Insurance System.

However, on Dec. 16, 2008, Meralco canceled about 42 million shares owned by Landbank and issued new shares in favor of one Josefina Lubrica, an assignee of a Federico Suntay, citing an Oct. 24 order from the regional agrarian reform adjudicator in relation to a contested land under the government’s agrarian reform program.

The government bank protested the cancellation without its consent. Landbank said the premise cited by Meralco was null and void as the new Department of Agrarian Reform (DAR) regional adjudicator had already issued an order on Dec. 15 that same year recalling and withdrawing the earlier order.

The bank said such an order affirmed that it remained the true owner of 3.8 percent of Meralco’s total issued stocks.

Meralco argued that since the cancellation and issuance of new stock certificates were based on an involuntary sale and final decision of the Supreme Court, the consent of Landbank was not necessary to transfer the shares.

In a letter to the Meralco president, Landbank said it should have been notified about the DAR’s demand to comply so that the power company would not have rushed into canceling the shares without hearing Landbank’s side of the story.

Because of the dispute, trading on Meralco shares was suspended at the stock market from Dec. 17, 2008, to Jan. 19, 2009. The PSE also fined Meralco for its nondisclosure.

On March 18, 2009, Landbank filed plunder charges in the Office of the Ombudsman against former Meralco president Jesus Francisco, Meralco corporate secretary Emmanuel Sison, former DAR regional adjudicator Conchita Miñas, DAR sheriffs Juanita Baylon and Maximo Elejerio and Lubrica for selling the bank’s shares of stock in the power distribution firm.

On Sept. 24, 2012, Emilio Aguinaldo Suntay III filed a complaint in the Office of the Ombudsman against Landbank itself, its former president Gilda Pico, former Finance Secretary Margarito Teves, along with Ongpin, over the 2008 sale of shares in Meralco.

Also named respondents were San Miguel Global Power Holdings Inc. officials led by its chair Ramon Ang, counsel Estelito Mendoza, as well as “public respondent” Supreme Court Justice Lucas Bersamin.

Suntay questioned Landbank’s decision to sell its shares to the SMC group when a better offer had been made by the rival group, resulting in an opportunity loss for the government.

Source: Inquirer Archives