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Subic Bay Metropolitan Authority (MPD-SBMA)

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15 August 2010

SBMA foots P48-M bill for FSC separation benefits

The Subic Bay Metropolitan Authority (SBMA) has announced that it will advance a total of P48 million to its manpower subsidiary, the Freeport Service Corporation (FSC), in order to guarantee the full payment of separation benefits for 241 workers affected by the cessation of the firm’s operations.

This decision was made “with the welfare of FSC employees foremost in mind,” said SBMA administrator Armand Arreza in a press conference held at the SBMA administration building recently.

Although the two are entirely different entities, Arreza explained, the SBMA will be loaning funds for the FSC to provide separation benefits equivalent to one month’s pay for every year of service, which is above and beyond what the law requires.

He added that notices of separation will soon be issued to the remaining 241 FSC employees, with the full payment of workers’ benefits set 30 days thereafter.

“No, we’re not going to abandon the workers,” assured Arreza, as he committed the P48-million fund from the SBMA. “We are watching out for their welfare, as they have nothing to do with the company’s financial woes.”

He added that he has also directed the SBMA Labor Department to conduct a job fair and work out a livelihood assistance program for FSC workers.

FSC was created in 1995 to provide manpower services to the SBMA. Eventually, SBMA leased out to its subsidiary several tourism facilities under a revenue-sharing arrangement, with the SBMA share fixed at only 5 percent.

Arreza said the SBMA even paid FSC P6 million per month as “management fees” for overseeing SBMA’s assets. Despite these concessions, the FSC has incurred debts with its parent company in the amount of P56 million.

Records showed that more than 800 personnel were listed in FSC’s payroll before the first manpower reduction was undertaken in 2008. Officials said that for the size of its business operations, 200 personnel would have been enough.

In the first manpower reduction, some 652 FSC employees were absorbed by the SBMA, which also advanced some P 40 million for the partial payment of their separation benefits.

With the company’s manpower down to 270, the SBMA reduced its monthly subsidy to the FSC to P 4 million a month until it was totally stopped by January this year.

Since the FSC cannot sustain its operations, the FSC Board decided to mothball the company, declaring it in a “dormant state”.

Arreza said the mothballing was made “precisely to avoid the impending situation of FSC being unable to pay the salaries of its own employees and enable FSC employees to receive their separation benefits.”

Arreza explained that in a bankruptcy state, the assets of the company will have to be liquidated and divided among its creditors, with employees getting the first priority.

“However, if we declare FSC as bankrupt, employees will get nothing since it has virtually no assets. The FSC only has a facilities management agreement with the SBMA, and it is the SBMA that owns the assets,” he added.

Arreza said that the SBMA could, by right, declare the FSC bankrupt. “But that would be unconscionable, kawawa ang manggagawa,” he said.

With this, Arreza urged FSC employees not to direct their anger on the SBMA. “I repeat: SBMA and FSC are separate entities, and SBMA has nothing to do with FSC’s financial losses,” Arreza said. “In fact, the SBMA has disbursed a total of P3.2 billion to help out in FSC’s operations.” (SBMA Corporate Communications)

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