Metro Manila (CNN Philippines, January 18) — The Development Bank of the Philippines did not give the Lopez Group of Companies a free pass from its soured ₱1.6 billion loans in the early 2000s.

Dumper PTDA Party-list Rep. Claudine Diana Bautista, who asked for the House inquiry, said the write-off cost the Filipino people’s money.

However, the state-owned bank denied writing off the unpaid loans of the Lopez family for its current and former subsidiaries Benpres Holdings, Bayan Telecommunications, Maynilad Water, and Central CATV (also known as SkyCable) when it sold these debts in an asset sale in 2006.

DBP President Emmanuel Herbosa said the non-performing debts – or those which are behind amortizations for over 180 days – were sold to Lehman Brothers Asia Limited on October 16, 2006, which comes years after the 1997 Asia Financial Crisis and precedes the Global Financial Crisis from 2007 to 2009.

“There’s no condonation or write-off. There was a transfer or sale of loan accounts,” DBP chief compliance officer Atty. Soraya Adiong also told lawmakers.

At the time, DBP needed the additional liquidity in order to lend more to borrowers, Herbosa added. The bank availed of tax incentives as it sold the BayanTel and Central CATV loans through Republic Act 9182 or the Special Purpose Vehicle (SPV) Act of 2002 –– a move meant to trim losses from unpaid overdue loans.

Bangko Sentral ng Pilipinas Director Mary Anne Cube added that there is “no record” of DBP write-offs. Adiong said the Commission on Audit and the BSP have not flagged any irregularities regarding the asset sale.

The SPV law allowed tax breaks when selling bad loans and other non-performing assets to SPVs like the Lehman unit to free up cash flow. This is similar to the Department of Finance’s proposed Financial Institutions Strategic Transfer or FIST bill awaiting the President’s signing into law.

To qualify for incentives, a loan being passed on to an SPV must secure a certificate of eligibility from the central bank. However, Adiong said loans not qualified for the perk may still be transferred to other entities but without tax incentives, as provided under the Civil Code.

Both the DBP and Lopez Holdings Corporation President Salvador Tirona said they do not have documents of the loan transactions and the subsequent loan anymore as the deals were made over 20 years ago, and that these were turned over to Lehman Brothers Asia. Adiong added that the bank is required to destroy all files which are over a decade old, pursuant to the National Archives of the Philippines Act of 2007.

Deputy Speaker Lito Atienza and Nueva Ecija Rep. Rosanna Vergara both clarified that DBP never condoned or wrote off the Lopez Group’s loans, with the former noting that the entire investigation is based on mere allegations.

The House probe was triggered by last year’s hearings that looked into alleged misdeeds of the Lopez Group, which led to the denial of TV network’s ABS-CBN franchise renewal.

But Anakalusugan Party-List Rep. Michael Defensor accused former DBP officials of illegal acts.

“May mga officials ngayon diyan sa DBP na nag-commit ng graft and corruption kung binenta niyo ng mas mababa (ang loans) [There are DBP officials who committed graft and corruption for selling the loans cheap],” he said during the hearing.

The Lopez loans forms part of a cumulative ₱9.55 billion debts from over 2,000 borrowers which were sold to Lehman Brothers Asia for ₱3.83 billion, or just a third of the cost.

An asset sale means a different entity will be in charge of collecting or restructuring loan payments.

Another hearing will be scheduled regarding the issue, with House Minority Leader Joseph Stephen Paduano asking to invite more companies whose old loans were also sold off by DBP.

READ: Duterte threatens to look into alleged past loans of Lopez group