SUBIC BAY FREEPORT — The Philippine Guarantee Corporation (PhilGuarantee) is set to return P2.7-billion worth of properties to the Subic Bay Metropolitan Authority as part of a settlement agreement between the two entities.

SBMA Chairman and Administrator Jonathan D. Tan and PhilGuarantee president and CEO Albert Pascual signed a memorandum of agreement  and Deed of Dacion en Pago at the Boardroom of the Administration building on Thursday.

Tan said that PhilGuarantee is set to turn over the leasehold rights to the El Kabayo Stables, Times Square Complex, and the Triboa Bay Lots to the SBMA amounting to P2,777,650,836.01 as partial consideration or settlement of the company’s outstanding obligations as of 27 October 2020.

Revive Subic Bay Freeport Zone

“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 in,” he cited.

Philguarantee came into possession of said land properties from the Home Guaranty Corporation after it merged with Philippine Export-Import Credit Agency, which was later renamed as PhilGuarantee.

In 2004, through a foreclosure and subsequent Compromise Agreement, HGC acquired these land properties from the Financial Building Corporation.

APEC Summit

These properties were developed by FBC through land leases with SBMA in preparation for the Asia Pacific Economic Cooperation Leader’s Summit held here in 1996.

HGC was able to dispose of all of the properties acquired from FBC except for the 14.6-hectare El Kabayo Stables, 2.4-hectare Times Square Corporation, and the 5.6-hectare Triboa Bay Lots.

The company failed to dispose of the properties since no entity wanted to assumed the unpaid rental arrears of the said properties.

“From the period of 2007 to 2018, these three properties steadily deteriorated as the rental arrears piled up, exceeding P3-billion,” Tan said.

On 24 September 2018, the SBMA issued a Notice of Default on PhilGuarantee for the pre-termination and repossession of the Subic properties should the company failed to settle its rental arrears.

The company offered the assignment/dacion el pago to 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 P2,777,650,836.01,” Tan said.

Agree to submit to arbitration

“Since the dacion is insufficient to settle all of PhilGuarantee’s obligations, the SBMA and the company agree 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 rental revenue 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, wherein the OGCC stated that PhilGuarantee needs the authorization of the Commission on Audit (COA) on the matter.

COA issued Decision No. 2022-489 dated December 5, 2022, which PhilGuarantee received only last April 26, 2023.

The COA ruling stated, “Wherefore, the request of the Subic bay Metropolitan Authority and the Philippine Guarantee Corporation for this Commission’s authority to enter into a memorandum of Agreement and Deed of Dacion en Pago, is hereby GRANTED.”