Monday, August 25, 2008 DOJ chief: 'Disposal of gov't stake in Petron needs presidential approval'
THE Department of Finance (DOF) must first secure presidential approval before it can dispose the government's remaining 40-percent stake in Petron Corporation, a legal opinion of the Department of Justice (DOJ) stated.
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.
But in his opinion, Justice Secretary Raul Gonzalez Sr. provided impetus for the DOF to sell government stakes in the oil firm, citing Proclamation 50 of Malacañang, 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," Gonzalez said.
He 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, considering that there was an earlier approval by former President Fidel Ramos to privatize the 65 percent of Petron based on the recommendations of the Privatization Council (PC) and the Philippine National Oil Company (PNOC).
Teves added while it is provided under Section 5 of Proclamation 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 PC 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 that have been considered as no longer necessary or appropriate under government ownership or control must have been identified by the PC 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 Justice secretary stated.
Gonzalez further said the PNOC's disposition of Petron would not fall within the exception under Section of the Proclamation which states that the President's approval is no longer necessary "where a parent corporation decides on its own to divest of, in whole or in part, or liquidate a subsidiary corporation under the Corporation Code."
He noted that with 60 percent of Petron having been privatized in 1993, it appears that PNOC is no longer the "parent corporation" of Petron and that the latter, is no loner listed as one of its subsidiaries.
At present, Gonzalez said Petron is a publicly-listed company where the PNOC and the Aramco Overseas Company B.V. (now transferred to Ashmore group) each owns a 40 percent share of equity and the remaining 20 percent is held by close to 190,000 individual shareholders.
Thus, the disposition of the government's remaining shareholdings in Petron would not fall under the exception provided under Section 5 of Proclamation No. 50, he said. (ECV/Sunnex)
