Gov’t retains control of PNCC as CA junks Stradec bid

MANILA, Philippines - The government has retained ownership and control of Philippine National Construction Co. (PNCC).

This after the Court of Appeals (CA) reversed its decision in January last year awarding to Strategic Alliance Development Corp.(Stradec) state-owned shares of PNCC stocks worth at least P7 billion.

In a nine-page amended decision, the former special 14th division of the appellate court reversed its ruling in January last year, which granted Stradec’s damage claims by transferring government’s stake in PNCC to the private firm via award of sale from the Privatization and Management Office (PMO).

The CA granted the motion for reconsideration filed by PNCC on its earlier ruling that affirmed the July 1, 2010 decision of the Makati regional trial court, which declared Stradec as winning bidder in the failed privatization of the state-run firm in 2000.

The appellate court now ruled that the PMO (formerly Asset Privatization Trust) was correct in rejecting Stradec’s bid in representation of Dong-A Consortium.

“After a second hard look, We find that Dong-A Consortium, indeed, did not win the subject Oct. 30, 2000 public bidding conducted by the PMO for the simple reason that its bid of P1.229 billion was way below the indicative price of P7 billion,” stated the ruling penned by Associate Justice Vicente Veloso.

Former PNCC chairman and president Luis Sison lauded the appellate court for recognizing the firm’s rights and interests that he had fought for.

“This is a welcome development. The Court’s reconsideration not allowing a bidder who did not meet the terms of reference in the bidding, solidifies government’s ownership in PNCC,” he said in a statement.

“I am extremely pleased that the CA has been convinced of the futility of attempts to acquire government properties through means that are less than honorable. I have saved these valuable assets once before and this is not new to me. I will continue to safeguard the properties of PNCC as best I can,” he stressed.

Sison said the CA ruling would allow PNCC to continue contributing positively to the government’s coffers through excellent results from its toll investment.

“All these benefits and values would have fallen in the wrong hands. Now the government will not be short-changed by unscrupulous parties “trying to short-change the government,” the former PNCC executive added.

In its earlier ruling, the CA agreed with the RTC that PMO erred in rejecting the bid of Dong-A, which was the highest among the bidders, simply based on its discretionary power under Section 4.3.1 of the Asset Specific Bidding Rules (ASBR).

However, in its appeal, PNCC argued that Dong-A’s bid was rejected because its bid did not meet the indicative price set by PMO.

In reversing its ruling, the CA held that this undisputed fact has put aside question on PMO’ discretionary power.

“Here, the ASBR explicitly contains a reservation for PMO to reject any or all bids, including the highest bid, or to waive any defect or required formality therein... It, however, must yield to our finding that there is neither unfairness, arbitrariness nor grave abuse in the present case,” the CA explained.

PNCC also stressed in its appeal that the assailed ruling effectively closed a contract for the parties in the case, which should not be allowed because the court cannot compel the government “by judicial fiat to enter a contract against its will.”

With this ruling, the CA declared the 2000 public bidding as “a failure due to (PMO’s) valid exercise of its authority to reject Dong-A Consortium’s bid.”

As a result, the complaint filed by Stradec for declaration of right to notice of award or damages has been dismissed for lack of merit.

It can be recalled that PNCC, also through Sison, had won in December 2009 its bid in the Supreme Court to stop the P6.2 billion compromise agreement between PNCC and another bidder, in the failed privatization plan. the British-Virgin Islands-based Radstock Securities Ltd.

The SC had ruled that the deal was unconstitutional for being grossly disadvantageous to the government.