The Government Corporate Councel (GCC) of Philippines was asked by Supreme Court Justices on the legality of the P6.2 billion compromise agreement between the Philippine National Construction Corporation (PNCC) and Radstock Securities Limited Inc, a special purpose asset vehicle registered in the British Virgin Islands.
Former PNCC President applied to the high court to abolish (nullify) the PNCC-Radstock deal. At the hearing the PNCC was represented by Alberto Agra from GCC who was questioned on the following points: the expired tollway contract between the national government and PNCC, the issue that the PNCC will be insolvent upon implementation of the compromise agreement, and alleged fraud committed by PNCC officials in approving the compromise agreement with the BVI company.
In defending his petition to nullify the agreement with Radstock, former PNCC President argued that the corporation’s board violated the corporation code when it entered into the agreement with the BVI company without holding stockholders meeting.
The guarantee, allegedly issued by CDCP in relation to a loan obtained by its subsidiary is the basis for Radstock’s collection claim. The lawyer of the BVI company, Pacifico Agabin, said that Radstock’s evidence included a letter of guarantees and a certificate authorizing signatory to the guarantee in the trial court. But Agra said that the PNCC Board of Directors decided to compromise instead of losing the case and taking a risk of paying large sum to the BVI company.
The compromise agreement included also the transfer of P1.8 billion worth of real estate owned by the PNCC to Radstock, so the question of whether this BVI company could legally own land in the Philippines was also discussed during the court hearings. While Radstock has not yet found a qualified nominee, Agra said PNCC will be holding on to the land, but he was immediately answered that the provision allowing PNCC to temporarily hold the property was not included in the compromise agreement.