CA okays P6-B compromise between PNCC, Radstock

The Court of Appeals has approved the P6-billion compromise settlement between the state-owned Philippine National Construction Corp. (PNCC) and Radstock Securities Limited after it denied the opposition filed against it by a local firm and an associate of the late President Ferdinand Marcos.

In a nine-page resolution penned by Associate Justice Mariano C. Del Castillo, the CA’s Former First Division junked the motion for reconsideration filed by Strategic Alliance Development Corp. (Stradec) and Marcos crony Rodolfo Cuenca, a stockholder of PNCC and former president and chairman of the board of directors. The motion asked for a  reconsideration of appellate court’s Jan. 25, 2007 decision approving the “joint motion for judgment based on compromise agreement” between PNCC and Radstock.

“The motion for reconsideration of the decision dated 25 January 2007 and motion to defer issuance of entry of judgment filed by Stradec and Rodolfo M. Cuenca’s motion for intervention and motion to admit (attached motion for reconsideration and new trial) are both denied,” the CA ruled.

Presiding Justice Ruben Reyes and Associate Justice Arcangelita Romilla Lontok concurred with the ruling.

Radstock director Carlos Dominguez, welcomed the CA decision, saying it capped a long legal battle.

Dominguez said the compromise agreement represents a settlement of +/- 36 cents on the dollar of PNCC’s total debt obligation, a figure that is in line with accepted practice in the resolution of bad debts.

 “To pay P6 billion for a P17 billion debt is very reasonable any way you look at it. The compromise agreement came about because after the rejection of PNCC’s motions in the higher courts, the company faced strong odds of losing the case, which we had already won in the lower court,” Dominguez said in a statement.

Under the compromise settlement, the Radstock will receive from PNCC a “compromise amount” of P6.196 billion as payment for the firm’s credit obligation amounting to more than P2 billion 26 years ago.

PNCC through its chairman Arthur Aguilar and Radstock, through Dominguez, sought the appellate court’s approval of the Aug. 17, 2006 compromise agreement where both parties “have agreed to amicably settle” the case.

Aside from Aguilar, also signatory to the compromise agreement is then Government Corporate Counsel and now Solicitor General Agnes Devanadera.

Under the settlement agreement, Radstock agrees “to settle the case at the reduced compromise amount of P6,196,000,000, which may be paid by PNCC, either in cash or in kind to avoid the trouble and inconvenience of further litigation as a gesture of goodwill and cooperation.”

In its resolution promulgated on May 31, the CA dismissed the motions for reconsideration filed by Stradec, a bidder in PNCC’s failed privatization effort in 2000, and Cuenca, saying the motions were filed only after the final and executory judgment on Jan. 25, 2007.

The CA ruling rejected their grounds for a full or new trial of Radstock’s collection suit, which had led to a P13-billion award in the regional trial court (RTC). The total value of the debt has now ballooned to P17 billion due to additional penalties and interests since the date of ruling.

The CA noted that the High Court’s 2006 ruling, which dismissed PNCC efforts to throw out the collection suit, had already tackled the points raised by Stradec and Cuenca. It also pointed out that the SC had mooted Stradec’s motion to intervene in its decision.

“A judgment of the court approving a compromise agreement puts an end to litigation and is final and immediately executory,” the CA pointed out, citing internal rules of the appellate court.

 “Nothing is more settled in law than that once a judgement attains finality it hereby becomes immutable and unalterable… It may no longer be modified in any respect, except to correct clerical errors or mistakes… Any amendment or alteration which substantially affects and final and executory judgment, is null and void for lack of jurisdiction,” the CA said.

 In its decision last year, the Supreme Court said the regional trial court did not abuse its powers in ruling for Radstock. That was when it also mooted the motion for intervention filed by Stradec.

The compromise agreement resolves a 26-year old debt guaranteed by PNCC’s predecessor, CDCP. The SC remanded the hearing to the CA after ordering two reviews by the Commission on Audit. The COA also twice approved the compromise agreement, the second time by a unanimous vote of its en banc body.

The CA junked the plea of Stradec to remand Radstock’s collection case for full appellate trial. It pointed out that the compromise agreement was forged only after the Supreme Court threw out with finality PNCC’s appeal to have Radstock’s collection suit halted. Stradec tried to intervene in that case.

Radstock has already won a P13-billion award in the Regional Trial Court. The figure represents the debt principal (P2.4 billion in present value) and penalties and interests for 26 years of non-payment.

PNCC’s predecessor, the CDCP controlled by Cuenca, transacted the loan with Japanese giant Marubeni, issuing a guaranty for CDCP Mining.

Marubeni sold its collectibles to Radstock in 2000 after growing tired of more than a decade of futile collection efforts. Radstock, a special purpose vehicle, is owned by the Fiduciary Asean Recovery Fund.

The CA refused to tackle Cuenca’s claim that the loan was not covered by guarantees, an issue that had already been resolved in the court case.