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Oct 10, 2017 @ 22:12

Intensifying feud: Petron accuses PNOC of violating lease agreement


The feud between Petron Corp. and the Philippine National Oil Corp. rages on.

Petron has accused PNOC of breaching existing lease agreements when the latter asked the oil utility giant to nullify certain provions on the renewal of these contracts.

Section 2 of the lease agreements provides that “in case the parties fail to come to an agreement, the same terms and conditions shall apply except the initial rental rate for the renewal period shall be the rental rate at the time of expiration plus 2 percent thereof and subsequent rental rate shall be escalating by 2 percent per annum.”

“Accordingly, your letters — because they deny without legal causes Petron’s contractual right to renew – constitute fundamental breach of the three lease agreements, ” Petron’s general counsel Joel Angelo Cruz said in a letter to PNOC president and CEO Reuben Lista.

The contracts are set to expire in August 2018.

“It is Petron’s position that the lease agreements for the three properties and the renewal clauses therein are valid and binding. They are not in violation of any law nor manifestly and grossly disadvantageous to the government,” Lista said..

Lista wants to raise rental fees for properties occupied by its service stations and bulk plants because the existing rates are disadvantageous to the government.

In the event it declines to renegotiate the contract, Petron must submit a remediation plan and start packing up its facilities and cleaning the said properties as required by the Department of Environment and Natural Resources (DENR) and the Philippine Coast Guard.

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