The parent company of Ocean Adventure, Subic Bay Marine Exploratorium Inc. (SBMEI), has filed a case of illegal termination of its lease contract against the Subic Bay Metropolitan Authority (SBMA).
In a phone interview on Thursday, Robert Gonzaga, president and chief executive officer of SBMEI, told the Philippine News Agency (PNA) that ‘’we have been forced to take SBMA to court since they are clearly unwilling to deal with us in good faith. Their idea of negotiation is to pre-terminate our lease in the misguided assumption that it will force us to cave to their unreasonable demands. Unfortunately for locators in Subic, holding the investment of locators hostage seems to be the favored approach of this SBMA administration.”
In September, SBMA chair and administrator Wilma Eisma issued a notice of termination and repossession to SBMEI, operator of Ocean Adventure, Camayan Beach resort, and Adventure Beach Waterpark.
The SBMA insisted that SBMEI has failed to comply with its development commitments, with unpaid billings of about PHP6 million, illegally reclaimed and constructed building, and closed public roads without authorization.
In the pre-termination notice, SBMA conceded that of the 6 violations that they originally cited, only four remained after a curing period of 30 days.
“It was always within the power of the Eisma administration to do the right thing, but they went the other way for reasons known only to the current officials of the agency. They have made a policy of demanding locators to ‘volunteer’ to renegotiate existing contracts, revise or rewrite them, or threaten to pre-terminate if they don’t give in to SBMA’s demands. They went to the extreme with us probably because we publicly asked them to comply with the spirit and intent of the Ease of Doing Business law,” Gonzaga added.
In a suit filed before the Regional Trial Court Branch 3 in Balanga City, Bataan on October 18, with a prayer for temporary restraining order (TRO) and preliminary injunction, SBMEI said “clearly, the SBMA has no basis to declare that SBMEI is in default under the lease agreement, and terminate the lease agreement and repossess the lease premises. “
Eisma earlier said the SBMA has notified SBMEI of its violations as early as July and assiduously provided guidance to cure the problems, but the company did not submit a satisfactory proposal to correct the violations.
“We wanted them to stay, of course, but there was not much concrete action from their side,” Eisma said. “So after months of negotiation and attempts to help SBMEI keep its lease, there is no longer any other recourse but to apply the law and pre-terminate the company’s lease agreement.”
The SBMA official also said SBMEI’s failure to deliver its development commitments not only constituted violations of its contract, “but also prejudiced the SBMA’s financial interest because it curtailed the agency’s earning potential.”
She added that even as the SBMA was willing to reconsider SBMEI’s decades-old breach of contract, the park operator along with two other locators came out with a story accusing the Subic agency of not adhering to “ease of doing business” law.
But, in the complaint, SBMEI said even if the supposed violations were true, they are ‘’so minor as to warrant the extreme penalty of terminating the agreement.”
SBMEI added that under the contract it had with the SBMA, the penalty for these supposed violations would have only resulted in payment of penalty fees, the forfeiture of the performance bond in favor of SBMA, and the payment of SBMEI of increased reservation fee for future sites that it had yet to develop.
SBMEI also said SBMA has not approved its masterplan submitted in 2009 and that ‘’at most, the SBMA approved the masterplan submitted by SBMEI only and specifically as a conceptual masterplan.”
It said the SBMA, despite constant follow up, has failed and refused to act on the final amendment to the lease, which the SBMA itself declared as necessary for the approval of the development commitments.
The dispute between SBMA and SBMEI started after the latter began developing “The Hill” in 2010, a residential area within the property where mostly expats reside.
In July 2013, the SBMA issued a notice of violation to SBMEI but in November that year, the issues were deemed settled when a summary of agreements was reached by both parties in 2013.
But it took the administration of former SBMA chair Roberto Garcia two years to pass four board resolutions that resulted in the draft amendment sent to SBMEI in 2015, which SBMEI did not sign because apparently, it was inconsistent with the summary of agreements of 2013 and riddled with typographical errors that included the economic terms.
In the years 2014 to mid-2016, the SBMA began implementing some of the terms of the summary of agreements and board resolutions “issuing transfer of certificates of leasehold rights to lot owners in the Hill, collecting the 20 percent fee from SBMEI, issuing building permits for homes in the Hill, and issuing billing statements for minimum rent as per SBMA board resolution. “
But from October 2016 to the present, the SBMA has suspended all rights of the owners of The Hill. The lot owners requested an explanation but SBMA has not responded to them to this day.
After a March 2017 incident where a Hill resident ‘’was beaten nearly to death during a nighttime burglary at his house, Hill residents decided to install a gate at the main entry road to The Hill. “
This gate meant to keep resident of the Hill secure is among the violations cited by SBMA against SBMEI that led to the pre-termination of its contract, along with the alleged failure to develop the property.
In December, 2017, Eisma referred SBMEI’s pending issues to its Leisure Committee, where no action was taken by the agency to this day.
Another committee of SBMA, the Audit and Risk, took only a few weeks and a single inspection of the property to recommend the pre-termination of SBMEI due to its alleged failure to develop, which Eisma endorsed to the SBMA board.
But the SBMEI complaint said the Eisma administration did not execute or comply with its own 2013 board resolutions to amend the SBMEI lease and trigger a development commitment.
“Accordingly, there can be no failure on the part of SBMEI to comply with any development commitment or schedule,” the complaint said.
The company further alleged that ‘’SBMA has been receiving and entertaining proposals from prospective investors seeking to take over the area covered by the lease agreement with SBMEI.” (PNA)