STRATEGIC ALLIANCE DEV’T CORP. (STRADEC) V. RADSTOCK SECURITIES, LTD.

, ET AL
SV: PNCC’s affiliate the Basay Mining corp, obtained loans from the Marubeni Corp. for 20 years it denied liability of such
loan. However in 2010, it issued a board resolution admitting liability. Marubeni corp assigned its credit to Radstock, a
foreign corporation. Radstock then initiated proceeding for the collection of said loans. PNCC and Radstock entered into
a compromise agreement wherein they agreed to settle the loan at a lower amount.
SC: PNCC cannot enter into the compromise agreement. It is not a private corporation but a GOCC, as such any
compromise agreement it will enter into that exceeds P100,000 must go through congress first. 90.3% of PNCC is in fact
owned by the government and its board is composed of public officers.
1. The Philippine National Construction Corp. (PNCC) (previously Construction Dev’t Corp. Of the Philippines or
CDCP) was incorporated under the Corporation Code.
2. In 1978 and 1981, Basay Mining Corp. (later CDCP Mining Corp.), an affiliate of PNCC, , obtained loans from
Marubeni Corp wherein PNCC, without a board resolution authorizing the same, obliged to pay solidarily with
Basay. For 20 years, PNCC consistently refused to admit liability for the Marubeni loans.
3. However, in Oct. 2000, PNCC passed a board resolution recognizing a P 10.7 billion liability to Marubeni Corp.
4. 3 months later, Marubeni assigned its credit to Radstock for only US$ 2 million (or less than P 100 million, in stark
contrast to the P10.7 billion admitted receivable from PNCC).
5. Radstock immediately started actions for the collection of the amount. TC issued a writ of preliminary
attachment against PNCC and garnished the latter’s bank accounts and real properties. It denied PNCC’s Motion
to Dismiss. CA also denied PNCC’s peition for certiorari.
6. Later, PNCC and Radstock entered into a compromise agreeement whereby PNCC shall pay a reduced amount of
P 6.185 billion instead of the total amount of the debt, which as of 2006 has ballooned to P17 billion. COA found
the terms of the compromise as “fair and above board.” The CA also approved it.
7. STRADEC moved for reconsideration. STRADEC alleged that it has a claim against PNCC as a bidder of the
National Government’s shares, receivables, securities and interests in PNCC.
ISSUE: Does the PNCC have the power to enter into the compromise agreement? NO
 PNCC may not compromise the obligation. Under the Revised Administrative Code (RAC), compromise of claims
from a “government agency” exceeding P100,000 must be submitted to Congress. The Administrative Code
applies to PNCC because it is a government agency. It is a government agency because PNCC is a GOCC. As
provided in Sec. 2 on the Introductory Provisions of the RAC, “agency of the government” refers to “any of the
various unit of the government, including a...GOCC....”
 The dissenters’ position that PNCC has the power to compromise because it was incorporated under the
Corporation Code and is therefore an “autonomous entity” and is “just like any other private corporation” is
wrong. PNCC is not “just like any other private corporation” because it is indisputably a GOCC. Neither is PNCC an
“autonomous entity” because it is under the DTI, over which the President exercises control.
o The government nominees in the board are public officers subject to the Anti-graft and corrupt practices
act, and are accountable to the Government and the Filipino People
o 90.3% of the PNCC is owned by the government, to call it an autonomous entity which can enter into
compromises and transfer ownership of all its assets to a private third party without the approval
required in the Administrative code is to invite plunder of all such government owned corporations
 Furthermore, the dissenter’s assertion that PNCC is an autonomous entity is inconsistent with its position that
Sec. 36(2) of the Government Auditing Code is the governing law determining PNCC’s power to compromise.
o The same provision states that it applies to governing bodies of GOCCs. The phrase GOCC refers to both
those created by special charter as well as those incorporated under the Corporation Code.
o As held in Feliciano v COA, the COA’s jurisdiction extends not only to government agencies or
instrumentalities but also to GOCCs with original charters and other GOCC’s without original charters
(i.e., those created under the Corporation Code but are owned and controlled by the government).
 Thus, PNCC is a GOCC. As such, it is a government agency to which the provisions of RAC regarding compromises
apply. Therefore, it has no power to compromise the Marubeni loan. Only the Congress can do so. Since the
compromise agreement was not approved by Congress, it is void.
*there were other issues discussed
 The toll fees of the north and south Luzon expressways are public funds. (PNCC was granted a 30-year franchise to construct,
operate and maintain the toll facilities). The government owns the assets and facilities hence the government also owns the toll
fees and income derived from these facilities. And since it is public fund, the congress must enact a law first to enable the toll fees
to be used as payment for the compromise money. Without the appropriation law, PNCC cannot pay Radstock, otherwise they may
be liable for malversation of public funds.
 Radstock is a private corporation incorporated in the British Virgin Islands and is not qualified to own land in the Philippines.
Transfer of properties under the compromise agreement will not become effective.
 PNCC properties are government properties; public bidding is required for their disposal. Hence, the PNCC cannot just dispose
parcels of land by way of dacion en pago in favor of Radstock.
 PNCC must follow rules on preference of credit. Transfer of properties cannot prejudice the creditors of the corporation (including
the government).
Petition granted under GR no 180428. The board resolution admitting liability is void ab initio for causing undue injury to
the government. The compromise agreement is inexistent and void ab initio for being contrary to the Constitution.
Stradec is declared to have no legal standing to sue, its interest is dependent on the outcome of a particular civil case
which has already been decided.