[Vantage Point] The long shadow of Petron’s privatization: Why gov’t may have gotten raw end of the deal

The issue surrounding Petron is not new. What is only now becoming clear are its economic consequences.

The Supreme Court’s ruling last year closed a dispute that traces back to Petron’s 1994 privatization, and to the subsequent shifts in ownership from Saudi Aramco to Ashmore Group and eventually to San Miguel Corporation.

The original sale explicitly excluded the land beneath Petron’s refineries and depots, with those assets retained by the government. But when San Miguel acquired control of Petron through Ashmore, those same properties were effectively brought under the company’s ownership, prompting concern from the government. The question that follows is unavoidable: whether a P23-billion privatization excluded assets whose long-term value may have been far greater once the land beneath the infrastructure is taken into account.

If we compute the value of Petron’s land assets, it easily hovers at around P100 billion.

We draw this number from publicly reported land coverage of roughly 357 hectares, or about 3.57 million square meters. Applying a conservative blended valuation of around P25,000 to P30,000 per square meter for a mix of refinery, depot, and retail fuel sites, the total land value approaches P100 billion.

This is not a formal appraisal, but a Vantage Point indicative estimate grounded in prevailing land benchmarks — enough to illustrate the scale of what may have been excluded from a P23-billion privatization.

The issue resurfaces

Petron’s privatization came back into public view in early 2025, when it disclosed that the Supreme Court had resolved with finality its long-running dispute with the government through the Philippine National Oil Company (PNOC) over refinery land.

But the Court’s decision did not end the conversation.

Government lawyers continued to explore remedies, while officials pointed to the strategic and financial importance of the assets involved. What began as a legal dispute has since evolved into a broader question, one that goes beyond ownership and into how the country values and safeguards its most critical economic assets.

The problem appears to be straightforward: what elements of the deal were privatized, and what were not? Specifically, were the hectares of land beneath Petron’s refineries and depots — which were excluded from the 1994 agreement — retained as public assets, or were they, in effect, transferred to the private operator?

It’s a consequence of how the privatization was structured in the first place.

Petron, including its land assets, was effectively folded into San Miguel when the food and beverage conglomerate took over the refiner’s operations. The government contested this change, arguing that the land should have never been privatized — a matter that eventually made its way to the Court.

Thus came the inescapable question: did the selloff somehow skip properties whose long-term value might have been much higher once you factor in the value of the land in today’s market?

By 2026, the case was one that had moved beyond the courthouses and into the domain of public policy, valuation and public interest. A recent email message received by Rappler suggests that the government had been wronged by the Supreme Court ruling.

What happened before?

In 1994, the government, via the state-run Philippine National Oil Corporation (PNOC), sold a 40% stake to Saudi Aramco while introducing an initial public offering of about 20% of Petron’s shares. But just before the deal happened, a key restructuring occurred. Large tracts of Petron’s landholdings — refineries and depots — were segregated from the corporation and assigned to PNOC. Petron had continued operating these facilities in lease arrangements, with ownership of the land still owned by the state.

The reasoning was simple: privatize the operating business, but keep ownership of the land underneath it.

For years, that distinction went untouched. Petron operated the facilities. PNOC held the land titles. The arrangement thrived in contracts and corporate records, but not in public debate.

What changed was ownership.

More than a decade later, Petron came under new ownership. In 2008, following the acquisition of major stakes from Saudi Aramco and PNOC, the Ashmore Group consolidated ownership through a holding structure. Shortly after this, San Miguel bought that holding company.

Acquisition masterclass

San Miguel’s ascension to control was a case study in strategic transaction structuring. The conglomerate did not buy the Petron shares directly, but the holding company that held them.

In effect, the move transferred operational ownership before a formal tender offer to minority shareholders was made. The transaction showed how corporate takeovers can be accomplished using layers of ownership structures instead of through simple market purchases.

But the larger issue wasn’t control of the company. It was ownership of the land where all the refineries and depots stood.

PNOC has always maintained that these assets were not included in the privatization and were only leased to Petron. In that perspective, the government sold a refining enterprise but kept owning the strategic elements enabling that enterprise.

If that reading holds, the implications are hard to overlook.

Government gets the shorter stick

A P23-billion sale may have left out assets worth up to P100 billion. That gap alone reframed the transaction.

The Supreme Court decision, issued on November 25, 2024, and made public in January of the following year, notionally treated the case as one about legal ownership, and not as a challenge to privatization policy itself. It looked at titles, lease agreements, and the contractual ties that developed between Petron and PNOC, basing its ruling strictly on the documentary record.

But even after an entry of judgment had been issued, PNOC filed a second motion for reconsideration, invoking the “higher interest of justice.” Public disclosures show that the motion was still under consideration months after the Court had declared its ruling final and ultimately denied PNOC’s motion on July 2, 2025. That sequence alone underscores the weight of the issues involved and how questions surrounding the ownership and value of these assets continue to resonate beyond the Court’s formal resolution.

Courts adjudicate contracts and ownership. They were not meant to reevaluate the economic assumptions that underpinned policy choices made decades before.

That distinction is critical.

The ruling clarifies ownership under existing law, but raises a larger question: whether assets deliberately excluded from privatization can ultimately pass into private hands through legal interpretation rather than through an explicit public sale.

This is not an isolated trend.

The real impact of privatization in the Philippines often appears years after the deal. In the power sector, the sale of Napocor assets later reshaped electricity pricing and government obligations. In water, MWSS privatization led to tariff disputes and regulatory conflicts decades after the contracts were signed.

Petron now appears to belong to the same category: a transaction whose legal conclusion has been reached, but whose economic meaning continues to hound the market.

I welcome your views on these and other issues where decisions made in power shape the country’s economic future. – Rappler.com

Sources: Petron Corporation disclosures to the Philippine Stock Exchange and Securities and Exchange Commission, including the January 10, 2025 filing on the November 25, 2024 Supreme Court resolution in the PNOC land dispute; historical records of Petron’s 1994 privatization involving PNOC and Saudi Aramco; and corporate disclosures on San Miguel Corporation’s 2008–2010 acquisition of Petron through Ashmore Group.

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