THE Court of Appeals (CA) has affirmed a ruling that found Land Bank of the Philippines liable for damages to SMC Global Power Holdings Corp. over an agreement involving the purchase of shares in Manila Electric Co. (Meralco) in 2008.
In a 24-page decision made public on Nov. 5, the CA Eight Division said the Mandaluyong Regional Trial Court (RTC) Branch 212 has jurisdiction over the dispute.
“Succinctly, the unjustified refusal or neglect of appellants to perform their official duty of implementing the share purchase agreement which, in turn, deprived SMC Global of all the benefits to be derived from subject Meralco shares, made the former liable to the latter for damages,” CA Associate Justice Manuel M. Barrios said in the ruling.
The Mandaluyong RTC ordered the bank to pay P5 million in damages plus 6% interest because it delayed the implementation of the agreement to sell Meralco shares to the power arm of San Miguel Corp. (SMC).
In 2008, SMC Global Power and the bank entered into an agreement involving the sale of Meralco shares totaling P4.19 billion plus interest worth P553.85 million.
The state-owned lender nullified the share purchase agreement since the shares were involved in a just compensation case against the Department of Agrarian Reform adjudication board. The bank argued that the purchase agreement would be “grossly disadvantageous to the government,” which the court disagreed with saying the comment had no factual basis.
The appellate court noted that the SMC unit repeatedly sent demand letters between 2009 to 2014 asking for the implementation of the share purchase agreement.
“Although appellant may be apprehensive about proceeding with the share, nevertheless, such feeling cannot justify their continuous inaction on the pleas of SMC Global for a long period of time,” it said. — John Victor D. Ordoñez