Sandigan OKs Danding plea to sell 2.3% of San Miguel

(Updated 4:16 p.m.) The Philippines' Sandiganbayan on Friday granted a motion for authority to sell some 73 million class B shares of San Miguel Corp. The petition was filed by San Miguel chairman Eduardo Cojuancgo Jr. The shares, which are worth approximately P6.05 billion, represent roughly 2.3 percent of the total equity of Southeast Asia's largest food and beverage firm. In the 15-page resolution penned by Associate Justice Diosdado Peralta, the Sandiganbayan specified that the proceeds of the sale must go solely to pay loans owed to the United Coconut Planters Bank. Cojuangco had petitioned the court to allow the sale so proceeds may be used to service loans drawn from the UCPB and the Bank of Commerce. The Presidential Commission on Good Government and the Office of the Solicitor General opposed the sale on the ground that it would be tantamount to a final disposition. The shares in question constitute around 13 percent of the San Miguel stake being claimed by the government. In its ruling, the Sandiganbayan said the sale is necessary and would be beneficial to whoever is eventually awarded ownership of the disputed shares. “The Court finds that there appears justifiable ground to allow the sale of SMC “B" shares. (I)n the event that the instant case is decided in its favor, it (government) will be benefited by the sale of the shares because it will be relieved of liability for paying outstanding debts of defendant corporations …despite the fact that it will get less than 20 percent of the outstanding shares," it pointed out. The graft court noted that government lawyers did not dispute that the loans to UCPB and Bank of Commerce were drawn in to fund legitimate business ventures before the Cojuangco firms were sequestered. Likewise, the PCGG-OSG failed to refute Cojuangco’s assertion that the banks were poised to foreclose on the borrower firms’ collaterals unless the loans are paid up. The loans were secured by pledging collaterals of 68.55 million SMC “A" shares and 16.39 million “B" shares listed in the names of Primavera Farms Inc., Meadow-Lark Plantations Inc. and Silver-Leaf Plantations Inc. Cojuangco, through lawyer Estelito Mendoza, said the loans were earning P1.18 billion interests each year. “If only to alleviate the present predicament of defendant corporations beleaguered with paying exorbitant interests on the loan s and to avert the eventual foreclosure of the pledges thereon, the court finds that to allow the sale …would be more in accord with justice," the Sandiganbayan held. However, the Sandiganbayan warned Cojuangco and his companies that they ‘hold themselves liable to their transferees-buyers’ if the government claim prevails in the end. “While the Court exempts the sale from the express condition that it shall be subject to the outcome of the case, defendants Cojuangco, et al may well be reminded that despite the deletion of the said condition, they cannot transfer to any buyer any interest higher than what they have. No one can transfer a right to another greater than what he himself has," the court said. In its decision, the court said San Miguel must submit to it the outstanding balance of UCPB loans within 15 days of the receipt of the resolution. The Sandiganbayan also said Cojuangco must disclose the identity of the buyers 15 days before the actual sale. - GMANews.TV