Oil refiner Petron Corp. said it filed a case against state-owned Philippine National Oil Co. for breach of a binding and compulsory sale-leaseback contract.
Petron said in a statement released over the weekend that PNOC’s action not only posed a threat to the company’s shareholders but also to the broader economy that relies on its petroleum products.
Petron through counsel Poblador Bautista and Reyes filed a complaint before the Mandaluyong regional trial asking for the issuance of a temporary restraining order to “stop PNOC from performing acts aimed at ousting Petron of its leased properties.”
“If PNOC will continue to disregard its reciprocal obligations on the conveyance of our land, then they should return the properties to us. Petron has invested billions of dollars on these properties. PNOC’s actions clearly jeopardizes the country’s fuel supply security and government’s thrust to develop key industries,” Petron said.
Petron has existing lease agreements with PNOC for the sites of its $3-billion refinery in Bataan, 24 bulk plants and 67 gasoline stations. The company supplies more than a third of the country’s petroleum requirements.
Petron’s decision to go to court came ahead of Energy Secretary Alfonso Cusi’s pronouncement directing PNOC to negotiate with Petron to come up with a “win win solution.”
“We need to clarify that’s the TRO for. I understand PNOC has not issued any order and what has been expressed in their letter is desire to set aside a provision. If Petron finds the position expressed by PNOC unacceptable, they should talk,” Cusi said.
Petron, however, said it offered to negotiate the agreement with PNOC as early as 2016 but it was constrained to seek judicial intervention when PNOC president Reuben Lista announced plans to terminate the lease agreement with Petron on the basis of provisions in the contract allegedly disadvantageous to the government.
Petron said Lista sent two additional letters dated Aug. 1 and 31, 2017 demanding “to nullify certain provisions of the lease agreements that pose a stumbling block before we can proceed to negotiate the renewal.”
Lista asked Petron to abandon t and clean up the contested sites on or before expiration of the lease in August 2017.
Petron said Lista also offered the properties covered by the subsisting leases to interested new independent oil companies, “in total disregard of the rights of Petron.”
Petron said the leased properties were originally owned by Petron, acquired over several years to be used for its refinery, distribution and sales operations. Petron said it was compelled to give up the land to PNOC in 1993 to comply with the requirements of its privatization.
The company said the transfer of the properties was enabled through a deed of conveyance and lease agreements that guaranteed long-term and continuous use by Petron in a bid to secure foreign and local investments in Petron and ensure stability of its operations.