MANILA — State-owned Development Bank of the Philippines (DBP) did not condone and did not write off P1.6 billion in loans to companies controlled or affiliated with the Lopez family that turned sour as a result of the lingering 1997 Asian financial crisis.
In a statement on Tuesday, DBP President Emmanuel Herbosa said he told a House hearing held Monday (Jan. 18, 2021) that there was no truth to the alleged condonation or write-off of loans by the DBP in favor of companies controlled by or affiliated with the Lopez family.
“DBP takes the position that there is no loan condonation or write-off involved in the non-performing loans (NPLs) and non-performing assets (NPAs) covered by the banking transactions with DBP of the companies controlled or affiliated with the Lopez Family,” Herbosa said.
“These NPLs and NPAs were dealt with in the regular course of business and disposed of by DBP pursuant to Republic Act (RA) No. 9182 (The Special Purpose Vehicles Act of 2002), as amended by RA No. 9343 and other applicable laws, which authorized financial institutions, like DBP to transfer NPLs and NPAs to SPVs created under the Act,” Herbosa added.
According to lawyer Soraya Adiong, DBP head of legal services, the loans to the Lopez companies were part of P9.55 billion in NPLs and NPAs that the bank sold in an auction to two special purpose vehicles (SPVs) or financial companies that specialize in buying these receivables at discounts. DBP earlier extended the loans to over 2,000 other companies that later encountered also difficulties during the Asian financial crisis.
“In fine, what took place in the subject transaction is not loan condonation which is gratuitous or write-off, rather it was a true sale, particularly authorized by RA 9182 and the Civil Code of the Philippines, and where due public bidding was conducted resulting in the payment of Php 3.83 billion bid in favor of DBP,” Herbosa explained.
Adiong also said that the Commission on Audit (COA) went over the sale and transfer of the NPLs and NPAs, but the COA “found no negative findings”.
When the issue of the Lopez Group’s alleged condoned loans were raised a few years ago, Lopez Holdings issued a statement, clarifying that it paid all the loans, including interest payments. But the payments went to the holders of the loan papers and not to DBP, which had sold the debt papers already.