Sandiganbayan upholds POTC, Philcomsat sequestration

The Sandiganbayan has upheld the sequestration of Philippine Overseas Telecommunications Corp. (POTC) and its wholly-owned subsidiary Philippine Communications Satellite Corp. (Philcomsat).

In a resolution, the Sandiganbayan’s Third Division denied the motion filed by defendants who claimed the sequestration order against POTC and Philcomsat was invalid and should immediately be lifted.

Named defendants in the case were Jose Africa, Manuel Nieto Jr., Ferdinand Marcos, Imelda Marcos, Ferdinand Marcos Jr., Roberto Benedicto, Juan Ponce Enrile, and Potenciano Ilusorio.

The Sandiganbayan resolution now paves the way for the Presidential Commission on Good Government (PCGG) to resolve the board fight in POTC and Philcomsat. The government owns 40 percent of POTC which entitles it to at least three board seats in the company and at least four seats in Philcomsat.

On Aug. 27, 1998, government representatives nominated by then President Estrada were installed to the POTC and Philcomsat boards. These were Ronaldo Salonga, Benito Araneta, Edgardo Villanueva and Carmelo Africa Jr.

The other directors representing the private shareholders who were elected during the meeting were Nieto, Lourdes Africa, Ilusorio, Katrina Ponce-Enrile and Honorio Poblador III.

But trouble erupted at the sequestered firms when a group of minority shareholders led by Victor Africa and Erlinda Bildner formed their own board in POTC and Philcomsat and challenged the elected board led by Nieto and the government nominees.

The Africa-Bildner group is questioning the 40-percent ownership of the government in POTC, saying the stake should be only 35 percent as a result of a compromise agreement between Ilusorio and the PCGG signed by former commissioner Hermilio Rosal. Bildner is a daughter of Ilusorio.

The compromise agreement purportedly reduces the government’s stake to 35 percent and gives Ilusorio rights over the five percent stake.

The compromise agreement was upheld by the Sandiganbayan in 1999. The PCGG and other parties elevated the case to the Supreme Court which then issued a temporary restraining order (TRO) in March 2000 suspending the implementation of the compromise agreement.

In June 2005, the High Tribunal upheld the Sandiganbayan decision approving the PCGG-Ilusorio compromise agreement but not the board meetings held by the Africa-Bildner group to wrest control of POTC and Philcomsat on the strength of the compromise agreement.

The board meetings were held by the Africa-Bildner group while the Supreme Court TRO was in effect.

The board squabbles continued even as new government nominees were appointed in 2002. Appointed by President Arroyo to the POTC board were Enrique Locsin, Manuel Andal and Guy de Leon.

Despite their installation in the POTC and Philcomsat boards, the government nominees were prevented by the Africa-Bildner group from entering the company premises and taking part in managing the affairs of the corporations.

The group, which has physical control of the company including its corporate and financial books, prevented Locsin from entering the Philcomsat offices in Makati.

Locsin had filed an incident report with the PCGG regarding the actions of armed guards at the Philcomsat premises preventing him from entering the building and holding office.

The PCGG controls 40 percent of POTC through two sequestered firms, Independent Realty Corp. (IRC) and the MLDC Land Development Corp. (MLDC), both registered stockholders of POTC and owners of 40 percent of POTC’s outstanding capital stock.

IRC and MLDC were surrendered to the National Government by Jose Yao Campos in 1986. Originally, the 40-percent interest of the government was owned by the National Development Co. (NDC), with the late Ilusorio as Marcos nominee.

Ilusorio, a known associate and crony of the deposed president, reportedly facilitated the transfer of the NDC stake to IRC and MLDC, both family corporations of the Marcoses

The PCGG is seeking a thorough accounting of POTC and Philcomsat earnings and expenses. Since 2000, the two companies have failed to file the necessary financial statements as mandated under Securities and Exchange Commission (SEC) rules largely because of the board squabbles between the opposing groups.

Recently, Locsin, in a separate case, sought the intervention of the Sandiganbayan to enjoin the Africa-Bildner group from representing themselves as directors and officers of POTC and Philcomsat.

Representatives of the Africa-Bildner group, however, allegedly sought to mislead the court by denying the effectivity of the sequestration orders issued by the PCGG over the corporations.