Succession Issues

Succession issues

Talk has also been rife that the health of Tan has been deteriorating. This has raised issues about succession.

Tan, who has several heirs and has had disputes with his most trusted brother and business partner, was considered to have cashed in on Fortune Tobacco, the undisputable leader in country's cigarette market for decades.

In February, Fortune inked a joint venture agreement with multinational cigarette maker Philip Morris for an undisclosed amount.

Besides PAL and Fortune Tobacco, Tan also owns considerable stakes in beermaker Asia Brewery, commercial banks Philippine National Bank and Allied Bank, among others.

Tan is the second richest in the country, next to mall magnate Henry Sy, and one of the three Filipinos whose wealth has breached the billion-dollar mark, based on estimates of Forbes.

His wealth stands at $1.2 billion in July 2010, according to Forbes. A big chunk of his fortune comes from Hong Kong-based Eton Properties, which has been pursuing affordable residential and sprawling township projects in the Philippines.

Interestingly, his son and namesake, Lucio Tan Jr., has been trying to move away from the shadows of the 77-year-old patriarch.

Tan Jr. has bought into MRC Allied, an inactive mining stock listed in the local stock exchange. MRC Allied has been tapping the capital markets -- instead of his dad's billions -- to raise funds for prospective projects in mining and power.

http://www.abs-cbnnews.com/business/01/13/11/philippine-airlines-sale

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TAN HAS HAD DISPUTES WITH HIS MOST TRUSTED BROTHER AND BUSINESS PARTNER, MR. MARIANO TANENGLIAN

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Is Philippine Airlines for sale?
By Lala Rimando, abs-cbnNEWS.com
Posted at 01/13/2011 9:05 PM Updated as of 01/13/2011 11:52 PM

MANILA, Philippines - There are ongoing talks between the management of local carrier Philippine Airlines (PAL) and potential investors.

This was confirmed on Jan. 13 by PAL Holdings, the listed firm that owns 85% of PAL.

However, these talks are purely "exploratory," stressed PAL Holdings in a disclosure to the stock exchange.

"Upon inquiry from the President of Philippine Airlines, Mr. Jaime Bautista, the latter neither confirmed nor denied any serious discussion with Mr. Ramon Ang on the purchase of 40% of Philippine Airlines, saying that any alleged talk with any party are all exploratory in nature," PAL Holdings' corporate secretary Ma. Cecilia L. Pesayco wrote in the disclosure.

The listed firm issued the disclosure after a columnist of The Philippine Star wrote that Ang, president of conglomerate San Miguel Corp, is PAL's "knight in shining armor" who is "dead set in getting into the airline business."

The same online piece added that PAL chairman taipan Lucio C. Tan has allegedly "decided to unload a substantial number of shares from the country's flag carrier with the right buyer and divest his holdings at a premium price."

For months on end, speculation has been rife that the 70-year-old airline is on the selling block after it encountered massive losses of US$312.1-million from 2008 to 2010 largely due to previous spikes in fuel prices, which account for bulk of its operating expenses.

It has also been unable to deploy its new aircrafts to profitable routes, such as the US and Europe, due to the inclusion of the Philippines in the safety blacklists of these destinations' respective aviation bodies.

To cope, PAL rolled out cost-cutting measures that involved outsourcing non-core operations, reducing benefits and adjusting retirement age.

These resulted in almost year-long battles with its labor unions.

The cost-cutting measures remain on hold as PAL continues to assert itself in separate labor cases with the ground crew and flight attendants unions.

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In 2009, a business leader predicted that there is NO Lucio Tan Group of Companies without Mariano Tanenglian.

1977 bank case haunts Lucio Tan, Marcoses

http://www.manilastandardtoday.com/insideNation.htm?f=2011/january/8/nation4.isx&d=2011/january/8

1977 bank case haunts Lucio Tan, Marcoses
by Macon Araneta

THE Sandiganbayan on Friday ordered taipan Lucio Tan, his brother Mariano Tanenglian and the estate of the late president Ferdinand Marcos to comment on the motion of the stockholders of the General Bank and Trust Company, now Allied Bank, which sought to transfer to them their shares of stocks or beneficial interest over Allied Bank.

The complaint-in-intervention, filed last December 10 by General Bank stockholders through their counsel Catalino Generillo, also asked the graft court’s fifth division for an alternative, and that is to order Allied Bank to pay them an amount equivalent to the value of the total assets of General Bank worth P688.20 million as of March 29, 1977.

The stockholders are Aderito Yuyuico, Martina Gutierrez, Augusto Carpio, Ma. Trinidad Kalaw, Zenaida Santiago, Lourdes Yujuico and Rosa Caram. They said that in 1977, Tan in connivance with the late president and Mrs. Marcos, former Central Bank Gov. Gregorio Licaros and Panfilo Domingo of PNB, fraudulently acquired control of General Bank, which eventually became Allied Bank.

The fifth division, chaired by Associate Justice Roland Jurado, gave Tan five days from January 7 to file his comment.

Only Tan’s counsel, Orlando Santiago, the partner of lawyer Estelito Mendoza, appeared during the hearing.

The other defendants, former first lady now Rep. Imelda Marcos, Senator Ferdinand "Bongbong" Marcos, Imee Marcos-Manotoc and Irene Marcos-Araneta, were directed to file their comment five days upon receipt of the anti-graft court’s order.

The Marcoses’ lawyer Robert Sison failed to attend the hearing as he was recovering from dengue.

Tanenglian’s counsel Raymundo Quiroz, said he had a prior commitment.

Since it was only Generillo and Santiago who were present in court, Jurado opted to issue an order.

Also named as defendants in the six-page complaint-in-intervention are the heirs of former PNB president Panfilo O. Domingo, estate/heirs of former Central Bank Gov. Gregorio Licaros, Carmen Khao Tan, Florencio T. Santos, Natividad P. Santos, Domingo Chua, Tan Hui Nee, estate of Benito Tan Kee Hiong (represented by Tarciana C. Tan), Florencio N. Santos, Jr., Harry C. Tan, Tan Eng Chan, Chung Poe Kee, Mariano Khoo, Manuel Khoo, Miguel Khoo, Jaime Khoo, Elizabeth Khoo, Celso C. Ranola, William T. Wong, Ernesto B. Lim, Willy Co, Shareholdings, Inc. and Basic Holding Corp.

Asked on the apparent delay in the filing of the intervention, Generillo told MST that under the law, intervention may be filed at any time before the court passes judgment on the case.

But he added that no action was taken by the plaintiffs-intervenors in the past years because they thought the former Presidential Commission on Good Government would block the intervention.

Generillo told the court that as stockholders of General Bank, the plaintiff-intervenors have an interest in the subject matter of the case.

"Only through intervention could they protect and enforce their right," said Generillo as he stated that Aderito Yujuico was authorized by the other plaintiffs-intervenors to file the intervention based on a Special Power of Attorney.

Generillo asserted that the claim of the plaintiff-intervenors over Allied Bank as successor of GBTC and/or the assets of Allied Bank is based on constructive trust, which is the appropriate remedy against unjust enrichment.

He explained that constructive trust is raised by equity in respect of property, which has been acquired by fraud, or where, although acquired originally without fraud, it is against equity that it should be retained by a person holding it.

DOLE RESOLVES PAL-FASAP DISPUTE

DOLE RESOLVES PAL-FASAP DISPUTE:

FASAP WINS LABOR DISPUTE AGAINST PAL

FASAP and its 1600 members won its labor dispute against PAL today.

The flight attendants of PAL will indeed have a very Merry Christmas after Department of Labor and Employment Secretary Rosalinda D. Baldoz ruled in its favor to correct the discriminatory compulsory retirement age from 55, 45 and 40 years old to 60 years old, for both male and female flight attendants.

In her Order dated December 24, 2010, Secretary Baldoz said, "The different retirement ages for flight attendants performing the same services constitute a clear discrimination of their right to equal work opportunity."

The DOLE Order further declared, "It is in this light that setting the compulsory retirement age of sixty (60) years - both for male and female cabin crew personnel - is fair and reasonable."

The retirement age of flight attendants is the most contentious issue between PAL and FASAP. The FASAP president Bob Anduiza rallied its flight attendants and led them to fight the discrimination issue of the CBA dispute this year after efforts to forge an amicable contract ended in a deadlock on the issue of age and gender discrimination.

"As union leaders, we owe it to our members and to other female workers in the country to stand up against discrimination in the Philippine workplace. If we cannot have equality in the PAL workplace, then it would be doubly difficult for other Filipino workers to assert their rights."

After learning of the DOLE decision, Anduiza was thankful and said, " We are elated with the decision of Secretary Baldoz, upholding equality for the PAL flight attendants. She deserves praise and respect for her display of fairness and resolve despite the reputed power and influence of PAL." Anduiza added.

In the said Order, Sec. Baldoz argued, "The set up under the old CBA is that female attendants are forced to retire at age 55, while their male counterparts may serve until age 60, for cabin attendants hired before 22 November 1996. Hereon, all cabin attendants hired thereafter, regardless of gender, shall be forced to retire at age 45; while, those hired after 22 November 2000 shall retire at the much early age of 40. Indeed, this structure appears to be discriminatory which may not only be in the context of gender but also as in terms of equal work opportunity as guaranteed under the Philippine Constitution and the Philippine Labor Code and its Implementing Rules."

A gentleman's delights ... Afternoon Delights

A gentleman's delights ... Afternoon Delights

Lucio lives by the saying of Chinese philosopher Mencius: "A gentleman delights in three things, and to rule the world is not one of these three things. For one's parents to be both alive, and for one's brothers to have no misfortune, that is the first delight. To look up and see Heaven without shame, that is the second delight. To obtain the world's talented people and educate them, that is the third delight."

Who is Lucio Tan? He was born on July 17, 1934 in Amoy, Fujian Province in what is now the People's Republic of China. Dr. Lu Kun Chen, two years older than he, remembers him from the boat ride that brought the two of them to the Philippines as children. Three high school friends - Tina Enriquez, Larry Uy and Robin Sy - contributed to the book.

DOLE RESOLVES PAL-FASAP DISPUTE: FASAP WINS LABOR DISPUTE AGAINST PAL

DOLE RESOLVES PAL-FASAP DISPUTE: FASAP WINS LABOR DISPUTE AGAINST PAL

FASAP and its 1600 members won its labor dispute against PAL today.

The flight attendants of PAL will indeed have a very Merry Christmas after Department of Labor and Employment Secretary Rosalinda D. Baldoz ruled in its favor to correct the discriminatory compulsory retirement age from 55, 45 and 40 years old to 60 years old, for both male and female flight attendants.

In her Order dated December 24, 2010, Secretary Baldoz said, "The different retirement ages for flight attendants performing the same services constitute a clear discrimination of their right to equal work opportunity."

The DOLE Order further declared, "It is in this light that setting the compulsory retirement age of sixty (60) years - both for male and female cabin crew personnel - is fair and reasonable."

The retirement age of flight attendants is the most contentious issue between PAL and FASAP. The FASAP president Bob Anduiza rallied its flight attendants and led them to fight the discrimination issue of the CBA dispute this year after efforts to forge an amicable contract ended in a deadlock on the issue of age and gender discrimination.

"As union leaders, we owe it to our members and to other female workers in the country to stand up against discrimination in the Philippine workplace. If we cannot have equality in the PAL workplace, then it would be doubly difficult for other Filipino workers to assert their rights."

After learning of the DOLE decision, Anduiza was thankful and said, " We are elated with the decision of Secretary Baldoz, upholding equality for the PAL flight attendants. She deserves praise and respect for her display of fairness and resolve despite the reputed power and influence of PAL." Anduiza added.

In the said Order, Sec. Baldoz argued, "The set up under the old CBA is that female attendants are forced to retire at age 55, while their male counterparts may serve until age 60, for cabin attendants hired before 22 November 1996. Hereon, all cabin attendants hired thereafter, regardless of gender, shall be forced to retire at age 45; while, those hired after 22 November 2000 shall retire at the much early age of 40. Indeed, this structure appears to be discriminatory which may not only be in the context of gender but also as in terms of equal work opportunity as guaranteed under the Philippine Constitution and the Philippine Labor Code and its Implementing Rules."

FASAP was also able to support its position on the economic aspect of the dispute, citing PAL’s most recent financial statements showing the Company’s recent financial recovery and profitability. PAL’s offer of 105 Million pesos was increased by the DOLE to around 200 million, after it ruled to grant reasonable wage increases, as follows:

"Under the circumstances, we find the following wage increases and augmentation in rice allowance fair and reasonable and, therefore, awards the same to FASAP:

Wage increases

Sandiganbayan junks case against former DBP execs

http://www.gmanews.tv/story/209172/sandiganbayan-junks-case-against-former-dbp-execs

Sandiganbayan junks case against former DBP execs
Article posted December 26, 2010 - 09:31 PM

The Sandiganbayan Fifth Division cleared two former top officials of the Development Bank of the Philippines of any liability in a P51 billion civil lawsuit filed by the Presidential Commission on Good Government 23 years ago.

In a 14-page resolution issued Dec. 22, the anti-graft court junked the government case against former DBP Board chairman Cesar Zalamea and former vice chairman Don Ferry.

The two were accused of approving the allegedly anomalous sale of DBP’s stake in Century Park Sheraton Hotel to Sipalay Trading Corp. for P150 million despite its supposed book value of P340 .7 million on Apr. 22, 1985.

DBP held its stake in Century Park through a 79 percent holding in Maranaw Hotel and Resorts Corp.

Government lawyers claimed Sipalay Trading was a ‘dummy’ company formed in 1984 by the late President Ferdinand Marcos and businessman Lucio Tan with a capitalization of only P900,000.

But the Sandiganbayan pointed out that not one of the witnesses presented by the PCGG and the Office of the Solicitor General was able to link either Zalamea or Ferry to any of the properties being claimed by the government as part of the alleged ill-gotten wealth of the defendants.

"No evidence presented by the plaintiff shows that defendants Zalamea and Ferry had any participation in the acquisition of the assets," the court said.

Even Senator Ferdinand "Bongbong" Marcos Jr., testifying for the government on February 2008, admitted on the witness stand that "Zalamea had nothing to do with any of the transactions." - MRT/KBK, GMANews.TV

Tan in-law backs out from US bank deal

http://www.manilastandardtoday.com/insideNews.htm?f=2010/december/24/news2.isx&d=2010/december/24

Tan in-law backs out from US bank deal

ALLIED BANK on Thursday announced that its planned merger with Philippine National Bank, both controlled by taipan Lucio Tan, had been put on hold after the buyer of an Allied Bank subsidiary in the United States backed out.

The buyer happens to be related by affinity to the Tan family, John K.C. Ng, whose daughter, Angie, is married to Michael Tan, a son of the taipan.

Allied Bank said Ng withdrew his offer to buy the 27.78 percent share of Allied Bank in Oceanic Bank, which has two branches in San Francisco and one in Guam.

"Mr. Ng would rather pursue other business opportunities instead of waiting for approval from the US regulators," Allied Bank said.

Ng, whose family owns Cathay Land, has yet to obtain approval from the US Federal Reserve to acquire voting shares of Oceanic Holding, which is based in Tortola, British Virgin Islands, and thereby indirectly acquire the voting shares of Oceanic Bank Holdings Inc. and Oceanic Bank of San Francisco.

Allied Bank needed to sell its equity in Oceanic Bank to secure approval of the merger with PNB.

The divestment of Allied Bank from Oceanic Bank was needed for the merger between Allied Bank and PNB, since US banking regulations on the entry of new foreign banks would be applied to PNB when it assumes ownership of Oceanic Bank by virtue of its merger with Allied Bank.

Allied Bank said it was now looking at other options "together with its US legal counsels and in consultation with the US regulators."

"The merger with PNB will still be pursued and the integration will continue with a view to improving revenue opportunities and operational efficiencies for both banks," Allied Bank said.

Lucio Tan’s brother loses plea to turn state witness

http://www.manilastandardtoday.com/insideNews.htm?f=2010/december/24/news1.isx&d=2010/december/24

Lucio Tan’s brother loses plea to turn state witness
by Macon Ramos-Araneta

THE Sandiganbayan on Thursday barred the estranged brother of taipan Lucio Tan, Mariano Tanenglian, from offering himself as a government witness against his sibling on the alleged ill-gotten origins of the billionaire’s tobacco, alcohol and banking empire.

The anti-graft court’s Fifth Division ruled that it could not allow Tanenglian, a principal defendant along with Tan, to turn state witness because the Presidential Commission on Good Government had terminated its presentation of evidence in April 2009.

Moreover, the government panel, represented by the Office of the Solicitor General, had already rested its case by filling a formal offer of exhibits in October 2009, which effectively prevented the plaintiff, in this case the government, from calling a new witness for the civil complaint, listed as Civil Case No. 0005.

The government is seeking to forfeit Tan’s assets in several companies including Fortune Tobacco Corp., Asia Brewery Inc., Allied Banking Corp., Foremost Farms, Himmel Industries Inc., Grandspan Development Corp., Silangan Holdings Inc., and Dominium Realty and Construction Corp and Shareholdings Inc., claiming that those assets were actually owned by the late strongman Ferdinand Marcos and his heirs.

"It is apparent that if granted immunity, defendant Tanenglian will give testimony or evidence not in support of the defenses he pleaded in his answer but in support of the complaint," the Sandiganbayan said.

"This court has repeatedly denied motions to reopen proceedings for the purpose of presenting evidence for the plaintiff [Republic of the Philippines]."

In his motion, Tanenglian claimed that the Dec. 2, 2010 deadline set by the Sandiganbayan to complete his presentation was unreasonable as it only gave him 17 days, when the government had more than two decades to present its case.

On the contrary, the Sandiganbayan said, all defendants were notified to prepare their presentation from Nov. 5, 2005, when it issued the pre-trial order setting the trial dates.

Still, "in the interest of justice," the Fifth Division agreed to grant Tanenglian up to February 3, 2011 to present his testimony even with the absence of immunity.

Tanenglian’s application for immunity was turned down by both the PCGG and then Solicitor General Agnes Devanadera, who were wary of Tanenglian’s "obscure motives" as the offer of cooperation offer came 20 years after the filing of the case and only after his much-publicized falling-out with Tan.

Devanadera also said Tanenglian held high positions in Tan’s companies and was a key defendant in the case.