The Privatization and Management Office, an attached agency of the Department of Finance, is reviewing the legal standing of state-run Philippine National Construction Corp. to manage and develop the government’s 9.9-hectare property in Pasay City.
PMO raised concern over PNCC’s plan to lease the prime real estate at prices way below the lot’s fair market value, which PMO said “may be considered disadvantageous to the government.”
It said in a statement the review was necessary not only because of PNCC’s plan to lease the real estate property in the financial center area along Macapagal Ave. at below-fair market prices, but also because the plan was “without apparent consideration towards the repayment of its existing obligations to the national government and various other government entities already amounting to billions of pesos.”
PNCC president and chief executive Miguel Umali in a letter dated July 21, 2021 asked PMO to comment on its proposal to lease out the FCA property for P300 per square meter, inclusive of value-added tax. PNCC’s proposal was for a term of 25 years which may be renewed for another 25 years, with an escalation rate of 3 percent every two years.
The proposal was also referred by the Office of the President, whose approval is necessary for such plans to move forward, to the DOF and PMO for comment.
Chief privatization officer Gerard Chan said in a letter dated July 26 PNCC has existing and unpaid obligations to the national government and government financial institutions such as the Development Bank of the Philippines, Philippine Guarantee Corp. and National Development Corp. amounting to at least P66 billion. It also owes the Toll Regulatory Board about P8.345 billion.
Chan said the settlement of PNCC’s outstanding obligations to various national government agencies was not reflected in the proposed lease of the FCA property.
The Commission on Audit, in its 2020 PNCC annual report, observed that PNCC left the FCA property idle for three years, which deprived the government of P1.5 billion in possible income.
Chan, during a recent DOF executive committee meeting, reported on PMO’s position on PNCC’s lease proposal to Finance Secretary Carlos Dominguez III.
“The PMO is unable to give its concurrence [to the PNCC proposal] because, number one, that asset is a government asset and they [PNCC] haven’t taken any steps regarding the settlement of their obligations to the national government; and, number two, their proposed rent is below market value,” Chan said.
Chan said PNCC’s proposed rent of P300 per square meter “does not reflect fair market values and may be disadvantageous to the government.”
Chan said that even the rental rate of P500 per sq.m/ that PNCC is charging Pacific Concrete Products Inc., an occupant of a three-hectare portion of the FCA lot, “does not appear to be updated for current market values.”
Pacific Concrete is a construction material supplier established by the late Manila Mayor Gemiliano Lopez, and is now led by his son, Atty. Alexander Lopez.