PSE freezes trading of Meralco shares due to Landbank row

Mid-day trading of the Manila Electric Co. (Meralco) shares at the local stock market was suspended yesterday amid the ongoing legal battle between the power firm and government-owned Land Bank of the Philippines .

In a memorandum, the Philippine Stock Exchange (PSE) said the public should be prudent with regard to the trading of Meralco shares’ as the firm has yet to resolve some legal issues with Landbank involving 42 million stock certificates valued at P2.4 billion.

“With the conflicting positions taken by LBP and Meralco on the subject MER shares, the investing public is hereby advised to exercise prudence in making any investment decision,” Pete Malabanan, head of the PSE disclosure department, said in a memorandum.

The management of the county’s stock market yesterday decided to freeze Meralco’s trading at mid-morning to give way to the clarification of Meralco on the issue of LBP’s shares.

The temporary stopping of Meralco’s trading came after Landbank sought for regulator’s interference to “prevent or suspend the trading of the affected Meralco shares of LBP or take whatever action is warranted under the circumstances to protect the interest of the investing public as well as that of LBP which remains as the true owner of the shares of stock.”

In its memorandum, the PSE said “Further, trading participants are hereby reminded that the principle of diligence requires trading participants to act with due skill, care and diligence in the conduct of business activities.”

It will be noted that Landbank questioned the decision of Meralco to cancel its 42 million stock certificates and putting it under the name of a certain Josefina S. Lubrica. The stock certificates were numbered 87265, 664638, 707447 and 707448.

According to Landbank officials, Meralco’s move may cause “complications” especially with the sale of the said shares (equivalent to about four percent of Meralco’s total shareholdings) to an investment group called Global 5000.

It will be recalled that Landbank’s shares in Meralco is part of the 10 percent share owned by the government financial institutions that Global 5000 is trying to buy for P9.9 billion.   

Noel Marquez of Landbank’s legal department, said this issue may be a setback as this may ”complicate” matters, especially with the sale to Global 5000.

At present, the Landbank lawyer admitted that they are still in the process of exploring their options.

But Marquez noted that Meralco’s move to assign the shares to Lubrica is “null and void” because the Supreme Court has already ruled on the case of Lubrica, the assignee of Federico Suntay.

It would be noted that Suntay allegedly owns a parcel of agricultural land in Sta. Lucia, Sablayan, Occidental Mindoro. Around 948 hectares were later expropriated by the government pursuant to the government’s land reform program.

Landbank said the Department of Agrarian Reform valued the land at P4.25 million but Suntay rejected the valuation and questioned it before the DAR Regional Agrarian Reform Adjudicator Conchita Minas.

RARAD Minas ruled in January 2001 that the land should be valued at P157.54 million.

Landbank questioned the RARAD’s valuation and filed a petition for determination of just compensation with the Regional Trial Court of Occidental Mindoro, acting as a special agrarian court.

The RTC dismissed Lanbank’s appeal prompting the bank to elevate the case to the Supreme Court.

Meanwhile, Landbank said RARAD Minas issued a writ of execution in September 2005 for the purpose of implementing her 2001 decision.

Acting pursuant to the said writ, RARAD sheriffs auctioned Landbank’s Meralco stocks totaling 53,557,257 shares for a ”bargain price” of P1 per share for P53.557 million. Landbank said it was not notified of the sale.