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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SBMA awards beach property

The Subic Bay Metropolitan Authority (SBMA) has awarded the management of a 5,600-square meter prime beach area here to a Filipino firm, Brighterday Subic Ltd., Inc. (BSLI).

SBMA deputy administrator for Business Raul F. Marcelo said this will boost the potentials of the “All Hands Beach Resort” as a world-class beach facility and turn it into a revenue-generating asset.

All Hands is one of SBMA’s tourism facilities formerly operated by the Freeport Service Corporation (FSC) under a facilities management agreement that was pre-terminated by both parties.

The pre-termination was prompted by the cesssation of the FSC’s business operations due to “irreversible financial losses,” said Marcelo.

The financial problems of FSC affected its management of All Hands, which failed to meet the standards of the Department of Tourism (DOT) last year, he said.

“Now that the resort has reverted to its owner, which is SBMA, it is incumbent upon the agency to ensure that the development and management of All Hands (beach resort) would meet DOT standards,” Marcelo explained.

Records show that while FSC operated several tourism facilities in the Freeport under a management contract with SBMA, it was never able to fully remit SBMA’s share of the earnings from these facilities, All Hands included.

Moreover, these FSC-operated tourism facilities slowly deteriorated due to FSC’s inability to institute the necessary maintenance programs.

The SBMA Board of Directors approved on June 18 this year the proposal of BSLI to develop and maintain the whole beach area and the facilities of All Hands in accordance with world-class standards.

According to Marcelo, BSLI has pledged to invest P10-million within five years to immediately uplift the status of the beach resort.

Under the management agreement, the revenues from entrance fees will go to SBMA while rental earnings from cottages, pavilions, nipa huts and other facilities will go to BSLI.

This means an estimated P 12 million in annual revenues for SBMA.

SBMA took over the beach resort Tuesday (August 3), deploying cashiers to man the entrance and other personnel to temporarily run the facility preparatory to the turn over to the new operator.

BSLI’s development plan on All Hands include the construction of drainage facilities, a sewerage system, 30 concrete Mediterranean-type beach cabanas, retaining walls for sand protection; conversion of existing pavilions into function halls, and the rehabilitation of the present 10 overnight cottages into 20 world-class Mediterranean-inspired cottages.

Existing facilities to be overhauled include plumbing, showers, restrooms and dressing rooms. Safety facilities, life guard towers, light facilities are set for improvement. Landscaping works for the entire beach facility will also be undertaken. (SBMA Corporate Communications)

Photo: All-hands beach property

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SBMA’s manpower subsidiary suspends operations

“We’ve exhausted all possible means to keep it operating,” this was how Atty. Ed Tamondong described efforts to resuscitate the manpower subsidiary of the Subic Bay Metropolitan Authority which he heads, the Freeport Service Corp. (FSC).

“(FSC has) no more source of revenue, we can no longer sustain the expenses for salaries and operations,” Tamondong said as he confirmed the decision of the board to mothball the company.

The FSC Board, which he has chaired since July last year, also decided last Friday (June 25) to give the remaining 240 employees separation pay equivalent to one month for every year of service.

The remaining FSC assets – two gasoline stations and a couple of beach facilities - have to be leased or put under private management to earn the amount needed to pay separation benefits and other obligations.

“Until we are ready to pay, we will not serve the retrenchment notice,” Tamondong added. FSC employees will be given 30 days notice before their separation from service takes effect.

Meanwhile, SBMA Administrator Armand Arreza directed Labor Department Manager Atty. Severo Pastor, Jr. to prepare a program to assist the workers who will be retrenched.

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

According to Tamondong, however, the FSC has never remitted any share to SBMA, prompting the agency to get back most of its assets over the past two or three years.
Since 2000, the SBMA has been subsidizing FSC to the tune of P 6 million monthly or P 72 million a year to cover salary and operating expenses.

The FSC’s financial problem was aggravated by its “bloated” manpower. More than 800 personnel were listed in its payroll before the first manpower reduction was undertaken in 2008.

“For the size of its business operations, 200 would have been enough,” Tamondong said.

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

With the company’s manpower down to 240, the SBMA reduced its monthly subsidy to the FSC to P 4 million a month until it was totally scrapped by January this year.

With the revenues from its remaining assets barely enough to keep it afloat, the FSC borrowed another P 4 million from SBMA in January for personnel salaries. In the summer months, which was peak season for tourism, the beleaguered SBMA subsidiary survived from revenues from its gasoline stations and beach facilities.

“Now it’s the lean season again, walang kita,” Tamondong said, adding, “Rather than pile up debts, the board decided to implement its decision last February or March to mothball the company.” (SBMA Corporate Communications)

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Freeport Service Corporation Goes Lean & Mean

The Freeport Service Corp. (FSC), the wholly owned subsidiary of the Subic Bay Metropolitan Authority (SBMA) providing manpower and allied services needs of the Freeport and its locators, is optimistic of attaining profitable operations for this year.

Antonio S.Chan, FSC president and SBMA senior director, expressed confidence over the weekend as he announced FSC's new profit-oriented projects, boosting existing tourism facilities managed by the firm such as the full promotion of its beach resorts at the Cubi Point area, namely Dungaree and All hands and the eco-tourism Jungle Survival theme park(JEST).

FSC undertook a major reorganization of its top management following the death of Ret. Lt. Gen. Jose Calimlim, who headed the FSC as president since 2004. Chan, who held various posts at SBMA and currently a member of the SBMA Board of Directors, has been tapped to head the service oriented subsidiary.

Chan's first task upon assuming the post was to reduce the administrative staff of FSC from 710 people to 266. Chan explained that out of 710, about 280 employees availed of the voluntary retirement package offered while the others' employment contracts expired and were not renewed.

With a "lean and mean" support staff, FSC was able to reduce its huge monthly payroll budget amounting to P2 million, which was a big drain on its revenues. Aside from the administrative staff, FSC also provides 1,800 to 3,000 of the workers to SBMA, handling office and environment activities of the Freeport.

Moreover, after five months of Chan's leadership, FSC has achieved more than P30 million in revenue earnings from a zero balance, aside from its debt servicing with the Land Bank and its fuel suppliers. FSC operates two gas stations at the Freeport, which incurred huge losses under the former management.

In view of the increasing number of locators at Subic, FSC management is going into the outsourcing business to hasten the manpower needs of foreign and local firms setting up activities at the Freeport. (SBMA Corporate Communications)

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