The underlying reason why Phoenix Petroleum can’t give Hidilyn Diaz free fuel for life

For brands confronted with controversy, honesty is often the best policy. 

Phoenix Petroleum Philippines Inc., owned by Rodrigo Duterte supporter and Davao-born businessman Dennis A. Uy, recently got embroiled in bad publicity after the camp of weightlifter Hidilyn Diaz revealed that the independent fuel retailer broke its promise of free fuel for life for the country’s first Olympic gold medalist. 

Phoenix Petroleum, in its social media posts last week, said in so many words that it unilaterally decided to stop the free fuel after two years because Diaz endorsed another fuel brand, without naming it.

It was Ramon Ang’s Petron Corporation, by the way. If you haven’t watched her Petron Rev-X endorsement, click the video below. As of posting, the video on YouTube has recorded 1.2 million views after it was uploaded on May 20, 2022; on Facebook, 3.8 million views. Pretty good reach.

But, as Diaz’s manager Noel Ferrer would point out, Phoenix Petroleum had no such conditions or restrictions when it announced the free fuel for life for Diaz after she won in the Tokyo Summer Olympics.

“It seems unfair for conditions to be introduced after the fact when the original gesture was presented to the public as purely gratuitous,” Ferrer said. Netizens have also pointed out that other brands have had no problem with Diaz endorsing their competitors.

This bad publicity probably would not have happened if Phoenix Petroleum’s finances were not in a poor state. Think about it: if Hidilyn regularly used two cars, based on a rough estimate of P10,000 worth of fuel a month, that’s only P120,000 a year. Not really a big amount for a corporation. So, this controversy is really indicative of how bad the state of affairs is in Phoenix Petroleum. 

Perhaps, the public would have been more understanding if Phoenix Petroleum gave a more complete picture of its financial distress. 

And, it’s not as if it’s a secret. You see, Phoenix Petroleum is a publicly listed company. Based on its recent disclosures, it’s been upfront with the Philippine Stock Exchange (PSE) about how it’s been trying to recover from a deep financial quagmire. 

Last Thursday, March 12, for instance, it gave an update on the company’s plan to “address its negative retained earnings.” This term means Phoenix Petroleum has been hit by losses, and having negative retained earnings is a sign of possible bankruptcy. 

Phoenix Petroleum, in fact, has not been able to release its “audited” financial statements for 2023 and 2024, saying its new auditor has yet to release these reports. 

The company also reiterated to the PSE that it is “currently in the middle of its Liability Management Exercise” or LME with its creditors. 

“This LME shall help the Company manage its outstanding debts while, at the same time, preserving some of its current resources, in order to boost its recovery trajectory. This LME now provides the Company a better runway for its recovery as it provides a more workable payment plan for its debts in a way that it can pay in manageable installments, preserving some of its capital for its continuing recovery and possible growth,” Phoenix Petroleum said. 

Earlier this month, on March 6, Phoenix Petroleum also disclosed that it has been in talks with its different creditor banks for the last five years “in order to manage outstanding accounts and ensure that the Company will be able to continue operate efficiently and effectively while at the same time continue to meet its outstanding obligations with these banks.”

Last year too, on September 22, Phoenix Petroleum told the PSE it has been unable to “payout any cash dividends for any class of shares” since it has “no appropriated retained earnings.” 

How bad is it for Phoenix Petroleum? 

Rappler’s business columnist and financial analyst, Val Villanueva, in his analysis of Dennis Uy’s group of companies, said that for Phoenix Petroleum, in particular, its net income has “collapsed by 78% over five years with results turning decisively negative.” For a more comprehensive look into Uy’s business empire, read “Vantage Point: The rise and fall of Dennis Uy.” But here are his findings on Phoenix Petroleum.

“Phoenix reported losses of P6.04 billion, widening from P2.71 billion in 2022 and P174 million in 2021. The persistent losses signal deep challenges in profitability, possibly due to high financing costs, volatile oil prices, and competitive pressure from larger rivals, such as Petron and Shell,” Villanueva said. 

Regarding Phoenix Petroleum’s debt, Villanueva said: “Its debt-to-equity ratio soared from 223% in 2021 to 466% in 2023. For context, healthy corporations typically stay below 100%. A ratio above 400% suggests that creditors, not shareholders, effectively control the balance sheet.”

He added that in three troubled companies of Dennis Uy, which include Phoenix Petroleum, they “owe far more than they earn, and in several cases, even more than they own,” which he said “is not a position that can be sustained indefinitely.” Another troubled Uy company is PH Resorts Group Holdings with its unfinished Emerald Bay Project in Mactan, Lapu-Lapu City in central Philippines. 

“Phoenix Petroleum remains illiquid in trading (meaning, shares are hard to buy or sell without affecting prices) and carries a heavy financial burden. Unless it restructures debt or finds a strategic investor, its ability to remain competitive is at risk,” Villanueva said.

He concludes: “Unless strategic investors, asset sales, or debt restructuring steps in, Uy’s business empire risks continued erosion — and possible collapse — over the next few years.” 

All is not lost on Phoenix Petroleum, however. Its chairman Dennis Uy can still minimize the damage by continuing the free fuel for life out of his pocket. Based on public disclosures, Uy, as chairman, and four other executive officers of Phoenix Petroleum had a combined total compensation (salaries/bonuses/13th month) of P87 million annually from 2021 to 2023 or roughly P17.4 million if divided equally among five executives. What’s P120K a year for a billionaire like him? – Rappler.com

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