Investors are worried that the country’s business environment is moving in the wrong direction.
Exhibit A is the case of the Uniwide Group. The Securities and Exchange Commission (SEC) appears hell-bent on driving this erstwhile No. 1 retail chain to the ground. The SEC wants to “cannibalize” or dispose of its remaining stores and other assets instead of helping the company pursue its 15-year rehabilitation program.
Uniwide has challenged SEC’s 2013 decision to ditch its rehab plan in favor of dissolving all its corporations and liquidating its assets even if Gow’s firm was, as of 2010, on track with its receivership program after having fully settled by then P6.16 billion or over 80% of its 2002-determined P7.5 billion debt to its secured creditors.
In contrast to SEC’s overzealousness, the Public Estate Authority (PEA) has, in its own sweet way, failed to resort to confiscatory or any other punitive move against Manila Bay Development Corp. (MBDC) for failing for a quarter-century now to develop a 40-hectare reclamation property in Parañaque that it acquired through public bidding in 1988.
This prime parcel, in what is known as the Central Business Park II at the junction of Roxas Boulevard and Coastal Road, was acquired back then at a concessional rate from PEA on condition that it would be developed by MBDC within five years of the 1988 sale. And Uniwide’s Jimmy Gaw leased 20 hectares of this lot in 1992 and built Coastal Mall there five years later on the promise of MBDC chairman Jacinto Ng that he would transform the business park into a Greenhills-type commercial district—or what was supposed to be the country’s biggest shopping mall complex at that time.
Uniwide, through its Uniwide Sales Realty and Resources Corp. (USRRC), has asked the Parañaque City Regional Trial Court (RTC) to cancel PEA’s deed of sale with MBDC for the buyer’s violation of the terms and conditions of the award pertaining to the development of this 410,467 square-meter parcel of the Central Business Park II along Macapagal Boulevard near the Roxas Boulevard-Coastal Road junction in Parañaque City.
USRRC noted that MBDC had acquired the prime property despite a “very low” bid of only P472.037 million, or a mere P1,150 per square meter, because the sale was contingent on the would-be winning bidder’s development of the lot within five years of their sale agreement.
USRRC chairman Jimmy Gow has testified in court that he decided in 1992 to put up Uniwide’s Coastal Mall there after being repeatedly assured by MBDC chairman Jacinto Ng that he would develop it into a Greenhills-type district.
MBDC president George Chua countered that the lessor had made no “development commitment” to Gow in exchange for his leasing 20 hectares of the reclamation property with Coastal Road frontage.
This case is but the latest in a slew of legal actions taken against MBDC and Ng.
Last year, the Parañaque RTC Branch 274 ruled that the MBDC-Uniwide lease contract was “iniquitous,” and described as an “inequitable conduct” MBDC’s acceptance of full rentals despite its failure to put up a business center as promised, delay in the Coastal Mall’s construction arising from the sudden construction of the Macapagal Boulevard, and Uniwide’s business losses resulting from the 1997 Asian financial crisis.
Also last year, investors led by stockholder Brenelie Rualo filed before the Office of the City Prosecutor in Makati City an estafa case against Ng and erstwhile Uniwide officers Jimmy Cabangis and Corazon Rey for allegedly squandering P1.7 billion in Uniwide funds for the construction of Coastal Mall and then defrauding P381 million through Uniwide’s payment of unnecessary mall rentals. Cabangis and Rey resigned from Uniwide, in 2003 and 2004 respectively.
Rualo and about 500 other Uniwide investors also asked the Parañaque RTC to order MBDC not only to return the P381 million in rentals, but also to extend Uniwide’s lease contract and pay P100 million in damages for what they called the “five badges of fraud” that the lessor perpetrated ever since their lease agreement was forged two decades ago.
These five “badges of fraud” are the surprise reduction in the lease area from 20 hectares to just 10 hectares shortly after the lease agreement was signed, to give way to what is now known as the Macapagal Boulevard; MBDC’s failure to inform Uniwide beforehand of a government plan to build this highway which forced Uniwide to alter its architectural designs and construction plans and, worse, return P400 million to investors who were hoping to lease space in a much bigger mall; absence of a renewal clause giving Uniwide the option to extend the lease at the end of the original 20-year contract to give it enough time to recover the investment; absence of a payment moratorium during the construction phase, which compelled the lessee to pay rentals in full even during the first two years of the lease when Coastal Mall was being built from 1997 to 1998; and MBDC’s move to evict Coastal Mall when the Uniwide Group was asking for more lenient lease terms as a result of Ng’s failure to build a commercial center in that area.
Another group of small investors led by Celso Eucogco have filed a petition before Parañaque RTC Branch 258, similarly seeking redress for the “anomalous” lease contract. They also questioned in another case the decision of MTC Branch 78 on MBDC’s motion to eject Uniwide from its reclamation property, saying the MTC should have dismissed outright MBDC’s P808-million case because it was “clearly outside the jurisdiction” of municipal courts, which are only allowed to handle cases involving amounts of P500,000 or below.
Much ado about ‘air’
Rivals PLDT and Globe Telecom are currently at loggerheads over Globe’s plan to rehabilitate financially ailing Bayan Telecommunications (Bayantel). Last month, the Court of Appeals granted PLDT’s petition for a temporary restraining order, stopping the deal in its tracks. Globe has countered with a motion asking the CA to dismiss the PLDT case for “utter lack of merit”.
The issue is not about Bayantel’s landline business. Lawyer Ray Espinosa, who heads PLDT’s Regulatory Group said that they are in fact encouraging Globe to take over the fixed line and even the data business of Bayantel quickly for the sake of its customers.
Espinosa pointed out that the issue is about the mobile frequency of Bayantel which was assigned to them 14 years ago on the condition that they wouldl roll out their service. Bayantel never rolled out a mobile service, and under the law, NTC should take back the frequency and auction it.
Radio spectrum is both scarce and valuable. That is why all countries regard radio frequencies as part of the public domain. Radio spectrum belongs only to the state which can, under clearly defined conditions, allow it to be used by private companies in order to provide a public service. If companies enjoying that privilege fail to deliver on their expressed commitment to deliver that public service, the radio frequency assigned to them is subject to recall.
In pressing for the dismissal of the PLDT case, Globe downplayed the issue of radio frequencies, saying its “co-use” of Bayantel’s frequencies is “not inimical” to PLDT. In particular, Globe stresses that it is acquiring shares in Bayantel which only requires the go-signal of the NTC.
Espinosa, however, stresses that Globe’s real concern is about acquiring the mobile frequencies assigned to Bayantel for Globe’s own use. Unfortunately, Bayantel’s frequencies should have been taken back years ago. The NTC should recall Bayantel’s cellular frequencies and put these up for public bidding, which could also raise at least P1.6 billion for government.
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