Thursday, October 12, 2017

Petron to seek legal redress over property lease dispute with PNOC

Published By Myrna M. Velasco

Breach of contract could be the next phase of serious legal battle between Petron Corporation and state-run Philippine National Oil Company (PNOC) on their escalating dispute over renewal of lease contract on real properties serving as sites of vital facilities of the oil firm.
Petron President and Chief Executive Officer Ramon S. Ang stressed “for now, we reiterate that he has caused PNOC to breach its agreements with Petron. We are awaiting the position of PNOC as well.”
He added “if they don’t want to negotiate unless we waive binding renewal clauses, then we have no choice but to seek legal redress to protect our rights and the interest of our shareholders.”
This week, the trading of barbs had been on Petron court, alleging that it was PNOC that had actually violated their lease arrangements.
“PNOC breached three lease contracts with Petron Corporation when it wrote the latter to nullify binding renewal clauses ahead of expiration threatening to jeopardize the oil company’s operations,” the oil firm said. It added that such action of PNOC also endangered “the interest of its small shareholders and partner-stakeholders.”
The existing lease pacts being questioned had been those for Petron’s $3.0-billion refining facility in Limay, Bataan; the sites of 24 bulk plants and 67 gasoline stations.
In a response-letter to PNOC President Reuben S. Lista, the oil firm noted that it has been the state-owned firm that was in breach of the provisions of their lease agreements.
Through its Counsel Joel Cruz, Petron insisted that “the lease agreements for the three properties and the renewal clauses thereon are valid and binding.”
The company added “these are not in violation of any law nor manifestly or grossly disadvantageous to the government.”
Because of the PNOC chief’s letter, Petron claimed that accordingly, such “deny without legal causes Petron’s contractual right to renew,” hence, this constituted “fundamental breach of the three lease agreements.”
The oil firm was referring to Lista’s letter enjoining the company “to waive certain provisions of the lease agreements because they are inequitable, or submit remediation plans,” so abandonment and clean-up of the specified sites could already be enforced.
Petron further cited PNOC’s recent move offering the properties “covered by the expiring leases this early to interested new independent oil companies,” which it deemed to have been “in total disregard of the rights of Petron.”
Cruz asserted “as you very well know, the long-term lease by Petron of the subject properties and the properties denominated as refinery properties which are the subject of a third lease between Petron and PNOC was the primary consideration for Petron’s conveyance of said properties at book value to PNOC.”

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