Philippines: Petron Remaining Stake Sales Requires Presidential Approval

In his five-page legal opinion, Justice Secretary Raul Gonzalez said the government’s privatization of Petron should be done in accordance with Proclamation No. 50, which requires presidential approval for disposition of government assets. “It is crystal clear therefore that the government’s privatization of Petron should be done in accordance with Proclamation No. 50 for it to be considered as a valid exercise of executive function and beyond the province of the courts to review," he said.

Gonzalez issued the legal opinion in response to the request of DOF Secretary Margarito Teves for a confirmatory opinion that the disposition of government stake in Petron needs the approval of the President. Former President Fidel Ramos had earlier approved the privatization of 65 percent of Petron based on the recommendations of the Privatization Council (PrC) and the Philippine National Oil Company (PNOC).

The sale of Petron, one of the three biggest oil industry players in the country, has been met with opposition from both the Senate and the House of Representatives, saying it will be untimely and disadvantageous to the government. Teves said while it is provided under Section 5 of Proclamation No. 50 that no approval is necessary where a parent corporation decides on its own to divest of, in whole or in part, or liquidate a subsidiary corporation organized under the Corporation Code, the PrC has generally sought approval before proceeding with the privatization of government assets as a matter of prudence and as deference to the highest executive authority.

In confirming the views of Teves, Gonzalez noted that in an earlier opinion it held that non-performing assets which have been considered as no longer necessary or appropriate under government ownership or control must have been identified by the PrC and the identified assets must have been approved by for privatization by the President.

Gonzalez, however, said it was not mentioned in Teves’ letter whether PNOC has already identified the remaining 40 percent shareholdings in Petron as no longer appropriate for government ownership. If the government shares in Petron are deemed no longer necessary, Gonzalez said there is no doubt that its privatization is covered by Proclamation No. 50 and should be done in accordance with law.

Gonzalez likewise noted that in the case of Petron’s privatization in 1993, then President Ramos gave his approval twice. “To comply with this requirement, this means that the privatization of the government’s remaining shareholdings in Petron should be identified and recommended by the Privatization Council and approved by the President," the opinion stated.

PetrolWorld 240808   Source: GMA TV News