Subic Bay Freeport – The Philippine Guarantee Corp. (PhilGuarantee) has agreed to return to the Subic Bay Metropolitan Authority (SBMA) 22.6 hectares of unused lands under an accord forged by the two entities.
SBMA chairman and administrator Jonathan Tan and PhilGuarantee president and chief executive officer Albert Pascual signed a memorandum of agreement (MOA) and deed of dacion en pago at the SBMA boardroom on Thursday.
Tan said the PhilGuarantee will cede leasehold rights over 14.6-hectare of the El Kabayo Stables, 2.4 hectares of the Times Square Complex, and 5.6 hectares of the Triboa Bay lots, amounting to over ₱2,77 billion.
Tan said that the agreement was in partial consideration or settlement of the company’s outstanding obligations since October 27, 2020.
“I have been tasked by President Marcos to revive the Subic Bay Freeport Zone. There are so many facilities and land areas that have been left alone and are rotting away. I believe that the SBMA should get back these leased facilities and repurpose them for other companies to invest upon,” he said.
PhilGuarantee came into possession of these properties from the Home
Guaranty Corp. (HGC) after it merged with Philippine Export-Import Credit Agency (PhilEXIM), which was later renamed PhilGuarantee.
In 2004, through a foreclosure and subsequent compromise agreement, the HGC acquired these lots from the Financial Building Corp. (FBC).
These lands were developed by the FBC through leases with the SBMA in preparation for the Asia Pacific Economic Cooperation
(APEC) summit held in 1996.
HGC was able to dispose of all of the assets acquired from the FBC except for the properties being turned over. The company failed to dispose of the properties due to unpaid rental arrears of these lands.
“From the period of 2007 to 2018, these three properties steadily deteriorated and rental arrears piled up, exceeding P3-billion,” Tan said.
On September 24, 2018, the SBMA issued a Notice of Default on PhilGuarantee for the pre-termination and repossession of the Subic properties should the company fail to settle its rental arrears. The company offered the assignment/ dacion to the SBMA of the three properties with a valuation of P3.291 billion.
“The SBMA counter-offered with a valuation of P2.263 billion, but both parties later settled for P2,777 billion,” Tan said.
“Since the dacion is insufficient to settle all of PhilGuarantee’s obligations, the SBMA and the company has agreed to submit to arbitration the remaining arrears amounting to P375 million.
And to help PhilGuarantee to cover its losses, the SBMA will give the company a share in the rentals generated by the agency when it is able to lease out the properties to third parties,” he added.
The company sought the help of the Office of the Government Corporate Counsel (OGCC) on the agreement. The OGCC stated that PhilGuarantee needs the authorization of the Commission on Audit (COA) on the matter.
The COA issued Decision No. 2022-489 dated December 5, 2022, which PhilGuarantee received last April 26, 2023.