Japanese firm caught in legal squabble over Subic investment

SUBIC BAY FREEPORT—Officials of a Japanese company inside this free port have expressed apprehension that the operation of their new plant will be stopped after an Olongapo City judge ordered them to suspend construction activities in a 1-hectare leased property here.

Rosario Alfonso, administration section manager of Cresc Inc., said they were surprised and upset with the temporary restraining order (TRO) issued by Judge Richard Paradeza of the Olongapo City Regional Trial Court (RTC) against their company on Nov. 11.

“Our Japanese employer and Filipino employees are worried and dismayed that the construction of our new factory and office will be delayed because of the TRO,” Alfonso told the Inquirer on Thursday.

Cresc Inc., a consumable printer manufacturer based in Japan, has started building its new factory on a 1-hectare land it subleased inside Moonbay Marina Leisure Resort here early this year.

Subic Coastal Development Corp. (SCDC) is the developer of the 16.5-ha Moonbay Marina Leisure Resort.

Paradeza granted the 20-day TRO filed by another company, Mobi and Red Enterprises, against Cresc Inc.

Mobi and Red Enterprises is also laying claim on the same
1-ha leased property located at Block 7, Lot 3 of Moonbay Marina Leisure Resort.

Former Zambales Gov. Vicente Magsaysay, whose daughter owns Mobi and Red Enterprises, said in his judicial affidavit that he had entered into a memorandum of agreement (MOA) with SCDC and Subic Bay Metropolitan Authority (SBMA) in 2008 that would allow him to enter into a sublease contract with SBMA.

Under the MOA, SCDC agreed to cede to SBMA its leasehold rights to the 1-hectare portion of the leased premises.

However, the MOA was never approved. It did not bear the signature of Armand Arreza, former SBMA administrator and one of the parties in the MOA.

Citing records from SBMA, lawyer Randy Escolango, SBMA deputy administrator for legal affairs, said the MOA required an execution of lease agreement by SBMA with Mobi and Red Enterprises.

Magsaysay said SBMA had yet to come up with the lease agreement. “Whenever we followed up with SBMA, we were told that it was already being processed,” Magsaysay said in his affidavit.

In a statement, SCDC officials said the MOA “clearly stated that within 30 days from the execution of the MOA, SBMA and Magsaysay agreed to execute a contract of lease with respect to the ceded portion.”

Based on the MOA, SCDC officials said, Magsaysay must secure the approval of SBMA on the terms and conditions of the MOA because otherwise, the supposed ceded area would revert back to SCDC.

“It seems that SBMA and Mobi and Red Enterprises never reached an agreement on the terms and conditions, as there was no lease agreement executed between the two parties. Therefore, the land was reverted back to SCDC, as the MOA states,” they said.

They also said SCDC was served with monthly lease billings for the supposed ceded area.

“After not hearing from Magsaysay for six long years, all of a sudden he is enforcing the null and void, and not to mention outdated, MOA he signed with SBMA and SCDC,” they said.

SCDC officials said that although Cresc Inc. would suffer further delays in its operation as a result of the TRO, they were willing to support the Japanese firm in the legal squabble with Mobi and Red Enterprises.

Alfonso said more than 500 Cresc Inc. employees were worried that they would lose their jobs if the legal conflict was not resolved. “Our Japanese employer might be threatened to pull out of this free port if this issue will not be resolved soon. And that will mean we will be losing our jobs as well,” Alfonso said.