Government Authority Over GOCC Mergers and Acquisitions
- The Governance Commission for GOCCs (GCG) is empowered to evaluate and endorse mergers of GOCCs based on their performance and relevance (RA No. 10149, Section 5[a]).
- Any government agency or GOCC seeking to acquire a controlling interest in a corporation must submit their proposal for GCG review and Presidential approval (RA No. 10149, Section 28).
Background on the Banks and Financial Assistance
- Land Bank of the Philippines (LBP) was granted universal banking powers including lending to agricultural and industrial projects (PD No. 251, s. 1973).
- United Coconut Planters Bank (UCPB), originally acquired to benefit coconut farmers, remains under rehabilitation with PDIC financial assistance amounting to P12 billion converted into special preferred shares.
Justification for the Merger
- The merger aims to strengthen capacity for delivering financial services to the coconut industry and agricultural sector.
- It is expected to foster countryside development, improve financial inclusion, contribute to economic sufficiency, and promote stability in the banking system.
Prior Approvals and Endorsements
- PDIC approved the sale of its Special Preferred Shares in UCPB to LBP for P12 billion.
- GCG en banc favorably endorsed the acquisition of PDIC shares by LBP and the merger of UCPB with LBP, subject to conditions and regulatory approvals.
- Monetary Board approved the acquisition of the PDIC’s voting shares by LBP.
Effect of Prior Canceled Merger Plans
- The merger plans assume cancellation of the operational merger between LBP and Development Bank of the Philippines previously approved in 2016.
Executive Authority for the Order
- The President, under the Constitution, exercises control over all executive departments and ensures the faithful execution of laws.
Key Provisions on the Merger
- The merger of UCPB with LBP is approved with LBP as the surviving entity.
- Approval is subject to the Securities and Exchange Commission's approval and compliance with RA No. 11524 and RA No. 11232 (Revised Corporation Code).
- The mode of merger shall be determined by UCPB and LBP in consultation with GCG.
- All UCPB assets and liabilities shall be transferred to LBP.
- Government agencies must take necessary steps to implement the merger within six months.
Acquisition of Outstanding UCPB Shares
- LBP shall acquire PDIC’s outstanding Special Preferred Shares in UCPB considering PDIC’s financial assistance recovery and share valuation.
- This acquisition is conditioned by terms previously approved by PDIC.
Integration and Reorganization Plans
- UCPB and LBP must prepare and implement an integration plan compliant with relevant laws and regulations.
- LBP may implement a reorganization plan approved by its Board, subject to RA No. 10149 and GCG regulations.
- Separated employees due to reorganization are entitled to separation incentives or benefits.
- UCPB personnel separated due to merger are entitled to separation benefits according to UCPB’s guidelines and applicable laws.
- Eligible UCPB personnel may be hired by LBP, subject to qualifications and civil service eligibility.
Repeal and Continuity Provisions
- Sections 2, 4, and 5 of Executive Order No. 198 (2016) are repealed.
- Any inconsistent issuances are repealed or modified accordingly.
- If any provision of the Order is held invalid or unconstitutional, remaining provisions remain in effect.
Effectivity
- The Order takes effect immediately upon publication in the Official Gazette or a newspaper of general circulation.