BIZ BUZZ: PNOC not giving up claim on Petron assets
Once in a blue moon, the Supreme Court entertains a second motion of reconsideration “in the “higher interest of justice” even after an entry of judgment had already been issued.
The quest of the state-controlled Philippine National Oil Co. (PNOC) to regain control of 357 hectares of real estate assets —carved out of the 1994 privatization of Petron Corp. and now valued at more than P100 billion —is one of those rare cases warranting reconsideration, according to the Office of the Government Counsel (OGCC).
In November, the SC affirmed its decision not to review the Court of Appeals (CA) decision dated Dec. 14, 2021, and resolution dated Oct. 6, 2022, that had effectively reversed the basic terms of the privatization of Petron, a former PNOC subsidiary.
The assets in question, comprising 357 hectares (ha) of land, including refinery lots in Bataan, 23 bulk plant sites and 66 service station lots across the country, had been taken out of Petron in 1993, or prior to its privatization, through property dividend declaration. Removing land assets gave Petron room to sell shares to offshore investors amid the 40-percent foreign ownership limit. Saudi Aramco bought into Petron, and later on, San Miguel Corp. gained control.
In 2019, the trial court ruled in favor of Petron’s petition to rescind the 1993 conveyance and ordered PNOC to return the assets, while Petron was ordered to pay P143 million (with legal interest from 1993), representing the book value of litigated properties at the time of property dividend declaration.
“The Court of Appeals found as one transaction (1) Petron’s declaration of its 357 ha of land as property dividends and (2) and Petron’s subsequent lease of those parcels of land despite Petron’s own admission that the lease was separate from, and independent of the dividend declaration,” the OGCC, which acts as PNOC’s legal counsel, said in a briefer.
Petron thus gained 357 ha of land valued at over P100 billion in exchange for just P143 million, it noted.
“As held by the Supreme Court in 1995, the government sold shares of stock in a Petron that did not own the parcels of land. The price paid to the government was fair because the government retained the parcels of land, which explains why the market values Petron at only P23 billion, less than one-fourth the value of the parcels of land,” the OGCC said.
Some 30 years after the privatization, the OGCC lamented that the private shareholders of Petron would get to own not only the oil refiner but valuable parcels of land—without paying for them.
For its part, Petron objected to PNOC’s raising of the reversal of privatization terms as this had not been invoked in previous petition for review, or in the CA and RTC. Would it have spelled the difference in court outcomes? Why didn’t PNOC lawyers flag this matter before? Is it too late? Only the high court can decide.
