MANILA, Philippines - British lending company Radstock Securities Limited asked the Supreme Court (SC) to reverse its decision nullifying the P6.2-billion compromise agreement between the firm and the Philippine National Construction Corp. (PNCC).
In a 64-page motion for reconsideration, Radstock contested the Court’s ruling that the implementation of the agreement was unconstitutional and would leave PNCC’s coffers empty.
Radstock said the PNCC would remain profitable because it will still have a 50-percent interest in the six-percent gross revenue of North Luzon Expressway (NLEX), which is expected to bring in P9.38 billion to the company in the coming years and three percent participation in the gross revenues of the new South Luzon Tollways Corp. worth P6.3 billion.
The firm added that the PNCC still has a 2.5 percent shareholding in the Manila North Tollways Corp. valued at P159 million; 20 percent holdings in Tollways Management Corp. (TMC), the management company of NLEX; 20 percent shares in Citra Metro Manila Tollway Corp., which owns the Skyway, worth P300 million; and 40 percent equity holdings in MATESI, the management company of the concession holder of SLEX.
“PNCC will not be disposing of all or substantially all of its assets if the compromise agreement is enforced as it continues to have substantial assets and remains a going concern with significant cash balances,” Radstock claimed through lawyer Pacifico Agabin.
The firm argued that the Court’s ruling violated its right to due process as it relied on the statements and allegations made during the Senate investigation in 2006 on the alleged irregularities in the transactions involving the Marubeni loans in declaring as unconstitutional the PNCC Board’s resolution recognizing its liability for the loans.
The British firm noted that it never had an opportunity to object to the minutes of the Senate sessions cited by the Court as well as to rebut the allegations of some senators and the negative testimonies of the resource persons who appeared during the Senate investigation.
Instead, Radstock said the Court should have just upheld the findings of the Commission on Audit that the terms of the compromise agreement are reasonable and aboveboard.
Radstock insisted that PNCC is a private corporation, and that its obligations under the letter of guarantee were financial obligations contracted by a private entity in favor of another private entity.
The SC majority opinion, according to Radstock, disregarded that in PNCC vs. Pabion case cited in the
dissenting opinion, it was held that PNCC is both a government-owned and controlled corporation and a private corporation.
“PNCC is still a private corporation even it if is a government-owned or controlled corporation and its Board alone has the power to compromise the obligation for the Marubeni loans in cases where the law does not require any further approval or where it is not covered by any such requirement,” Radstock said.
Radstock added that as early as 1924, the SC laid down the ruling in the National Coal Co. vs. collector of Internal Revenue, that a GOCC, even if created by legislation is a private corporation.
“Thus, while it may true that the funds of a GOCC like PNCC are characterized as ‘public funds’ for purposes of public accountability under our criminal and administrative laws, such funds can be garnished by creditors if the GOCC has been adjudged liable,” it stressed.
Radstock refuted the Court’s ruling that the compromise agreement violates Article XII Sections 3 and 7 of the Constitution, which bars private foreign corporations from owning land in the Philippines.
It explained that PNCC’s obligation to cede rights over several lots to qualified assignees does not amount to transfer of ownership of land to Radstock, thus, there was no violation of the constitutional provision.
Under its compromise agreement, the British firm noted, the PNCC shall assign to a third party to be designated by Radstock all its rights and interest to real properties provided that the assignee shall be qualified to own the same in the Philippines.
“Radstock’s participation in the transaction will be to designate qualified third-party. How Radstock will recover the assigned value of the real property from the qualified third party in order to satisfy the pertinent portion of the judgment obligation is between Radstock and the third party,” it said.
In its ruling last Dec. 6, the Court granted the petition filed by PNCC stockholder Luis Sison seeking to declare the compromise agreement null and void through a vote of 8-4.
Associate Justice Antonio Carpio, who wrote the decision, described the compromise agreement as “one of the most brazen and hideous pillage of public coffers” in the country’s history.
The Court declared that PNCC board resolutions admitting liability for the Marubeni loans are void ab initio (from the beginning) for being disadvantageous to the government and giving unwarranted benefits to a private party, which constitute corrupt practice and unlawful act punishable under Republic Act 3019 or the Anti-Graft and Corrupt Practices Act.
The SC said: “It is quite puzzling” that after two decades of refuting its liability for the Marubeni loans, the PNCC suddenly reversed itself in October 2000 by issuing the board resolutions.
The PNCC, according to the Court, admitted liability for the Marubeni loans despite the fact that it would exceed the value of its assets and that the 10-year period for Radstock to initiate action for payment of loans.
Under the agreement, Radstock, an assignee of Marubeni Corp., will receive from PNCC a “compromise amount” of P6.196 billion to settle its P2.02 billion loan obtained 26 years ago.
PNCC’s credit obligation to Radstock has ballooned from P2.02 billion to P17.04 billion due to interest and other penalties, according to the document submitted to Court.