Pioneer locators at Subic Bay Freeport are pleading for survival. They beg the Supreme Court en banc to undo a deal that would kill their businesses.
That deal goes back to 2010. Private Harbour Centre Port Terminal, Inc. is to take over Subic’s seaports and vast real estate.
Even Subic Bay Management Authority (SBMA) shuns the deal. It can’t give up control of freeport management and operation.
SC’s Third Division in 2021 compelled SBMA to grant Harbour Centre the deal. SBMA seeks reconsideration of the 3-2 split decision.
The locators also plead for definitive jurisprudence. They await the Third Division clerk’s referral to the en banc of their June 2023 motion.
The locators helped modernize the former base that the U.S. Navy left after Pinatubo’s 1991 eruption. In 1994-1996 Mega Subic Terminal Services launched hi-tech grain unloading plants. Via fertilizer landings, Subic Seaport Terminal, Inc. introduced the freeport to world maritime commerce. Amerasia Terminal Services systematized cargo handling.
In the last 12 years, the three pioneers contributed P2.7 billion to SBMA’s income. Subcontractors who installed pieces of machinery and shops around them also remit to SBMA.
In Nov. 2009 Harbour Centre unsolicitedly proposed to develop, manage and operate the freeport for P6.4 billion. By Feb. 2010 the outgoing SBMA chairman signed a joint venture – stating only P200 million Harbour Centre investment over three years.
The three-month “evaluation” surprised locators. Negotiations usually take years. The joint venture came ahead of publication and conduct of competitive challenge, a breach of 2008 guidelines.
Besides, it was during an election ban on government contracting. The deadline was set on Apr. 22, 2010, for submission of counter-proposals. SBMA received none, precisely because of the prohibition that insulates projects from political partisanship.
Too there was no clearance from the National Economic and Development Authority. The President chairs the NEDA board which consists of Cabinet secretaries. Technical, financial and legal experts screen major deals for viability.
Succeeding SBMA chairmen and directors refused to push through with the deal. In May 2011 NEDA declared that SBMA’s compliance with laws, rules and regulations “could not be ascertained”. That June the Office of the Government Corporate Counsel advised to amend the joint venture to suit NEDA guidelines.
In July 2011 NEDA invalidated the deal for procedural breaches. Joint ventures can be signed only after completion of three stages: submission of Swiss challenges, publication of contract, and notification of award.
In Aug. 2011 Harbour Centre petitioned the Olongapo City regional trial court to compel SBMA to award and proceed with the deal.
OGCC recommended suspension of notices of award/to proceed. The deal needed review due to NEDA’s invalidation.
Meantime in Sept. 2012 the RTC of Dinalupihan, Bataan voided the deal as unconstitutional and illegal. Reasons:
• Violating fair competition, will create a monopoly. Harbour Centre will become the exclusive port operator-cargo handler.
• SBMA will delegate to Harbour Centre its legislated function to fix tariff rates. Harbour Centre will have the discretion to fix such rates.
• It violated the SBMA Law. SBMA will abdicate power “to operate, administer, manage and develop the ship repair/shipbuilding facility, container port, oil storage and refuelling facility … as a free-market policy.”
• SBMA surrendered authority to manage and collect real estate rentals inside the five piers.
• SBMA forfeited duty to fix just and reasonable rates, fare charges and other prices.
In Aug. 2013 the Court of Appeals reversed the Olongapo RTC verdict and dismissed Harbour Centre’s mandamus case. Harbour Centre elevated the issue to the SC Third Division.
In Dec. 2021 the Third Division reversed the CA on three grounds. One, Harbour Centre has the right to immediate award since no counter-proposals were submitted. Two, SBMA and Harbour Centre’s signing of the joint venture before the project award was a mere “suspensive condition” to the outcome of competitive challenges. Three, NEDA approval is unnecessary.
Subic Seaport Terminals, Inc. now seeks an en banc ruling. It argues:
• Harbour Centre has no right to mandamus. A joint venture is discretionary, not compulsory, on SBMA.
• The Build-Operate-Transfer Law and 2008 joint venture guidelines do require NEDA approval. Here, NEDA withdrew consent.
• Harbour Centre cannot be entitled to contract award when no Swiss challenges were made in Apr. 2010, during an election ban.
• The joint venture process and contents violate NEDA guidelines, thus invalid.
Two questions: Shall Harbour Centre collect and SBMA lose the P2.7 billion income from the pioneers? Isn’t it grossly and manifestly disadvantageous to the government to enforce the deal 13 years after?
Jarius Bondoc is an award-winning Filipino journalist and author based in Manila. He writes opinion pieces for The Philippine Star and Pilipino Star Ngayon and hosts a radio program on DWIZ 882 every Saturday. Catch Sapol radio show, Saturdays, 8 to 10 a.m., DWIZ (882-AM).
The views expressed in this article are the opinions of the author and do not necessarily reflect the editorial stance of LICAS News.
