GCG: Landbank-DBP merger can move forward sans legislation

The proposed merger of state-owned lenders Land Bank of the Philippines and the Development Bank of the Philippines (DBP) can proceed without legislation, according to the Governance Commission for Government-Owned and Controlled Corporations (GCG).

Citing its study submitted to the Office of the President, the GCG said it “has the power to merge GOCCs which the Supreme Court affirms in its ruling in Lagman v. Executive Secretary” through the Republic Act No. 10149 or the GOCC Governance Act of 2011.

Late in March, the GCG announced it would evaluate the proposed merger of Landbank and DBP amid concerns raised by the latter that the merger would require legislation since both banks were created by different enabling laws or charters.

The GCG, in its study, found that it has the power to ascertain the manner of the merger, either De Jure Merger or De Facto Merger, pursuant to Memorandum Circular 2015-13 —which covers the the guidelines for merger or abolition/dissolution of GOCCs,.

The GCG said its study aims to resolve the legal issues raised by DBP and the Department of Finance (DOF).

The agency said the DBP posited that both banks were statutorily created and must therefore be merged through legislation while the DOF was of contrary legal position.

“In order to resolve the issue, GCG sought answers through the provisions of statutes and applicable jurisprudence on the matter. Legal frameworks were an important point of reference such as Section 5(a) of Republic Act No. 10149 (R.A. 10149) ; Lagman v. Executive Secretary; Section 17, Article VII, 1987 Constitution; and Section 2, Chapter 2, Book III, Administrative Code of 1987,” said GCG chairperson Alex Quiroz.

The Section 5 (a) of RA 10149 states that the GCG can evaluate the performance and determine the relevance of the GOCC, to ascertain whether such GOCC should be reorganized, merged, streamlined, abolished or privatized, in consultation with the department or agency to which a GOCC is attached.

Section 17, Article VII of the 1987 Constitution also reads that “the President shall have control of all the executive departments, bureaus, and offices.”

Meanwhile, Book III, Title I, Chapter II, Section 2 of Administrative Code of 1987, refer to the "Acts of the President providing for rules of a general or permanent character in implementation or execution of constitutional or statutory powers."

“The foregoing legal anchors empower President Ferdinand Marcos Jr. to implement the merger of the state-owned bank without waiting for Congress to file and pass related bills,” said Quiroz.

Finance Secretary Benjamin Diokno said that President Ferdinand Marcos Jr. had given the thumbs up for the merger of the two state-owned banks, which he said would result in P5.2 billion per year worth of savings for the government.

Landbank is the Philippines’ second-largest universal bank with P2.76 trillion in assets, next to BDO Unibank with P3.73 trillion in assets.

The DBP ranked eighth with P1.035 trillion worth of assets.

The GCG said the merger, should it proceed, must not result in the abandonment of any of the mandates of the two banks.

Landbank serves the agriculture sector, while the DBP takes care of the needs of industrial enterprises.

The planned merger of Landbank and DBP was first pushed by then-President Benigno Aquino III in 2016 but was abandoned by the Duterte administration due to concerns that this would not serve the public interest because the banks were created for different purposes.—AOL, GMA Integrated News