(Updated, 9:25 p.m.) The state-run Government Service Insurance System filed a P147.2-million ejectment and collection complaint against Philippine Plaza Holdings Inc. (PPHI) to evict Sofitel Philippine Plaza Manila from two lots that it allegedly occupies illegally.
GSIS chief legal counsel Isagani L. Cruz Jr. told the Inquirer that the state-run pension fund was “asking for reasonable compensation for the actual use of the property in the amount of P147,252,446.19 reckoned from June 25, 1991 to April 30, 2018, and P1,774,320 per month until the PPHI vacates lots 19 and 41.”
The case was filed before the Pasay City Metropolitan Trial Court, Cruz said.
In an official statement, PPHI counsel, Atty. Diane Christie Rosacia, said the company has not seen the copy of the complaint yet and could not issue any comment on the matter.
“We cannot make any comment because we have not seen the reported complaint. We shall respond to any purported complaint once we receive a copy. At any rate, if there is really a complaint that was filed in court, then the matter is sub judice, and, therefore, can no longer be subject of a public discussion,” Rosacia said.
The GSIS earlier claimed that the Sofitel operator has no lease contract with the GSIS for lots 19 and 41, which the hotel is using as valet parking space, site of cistern tanks and cooling tower, as well as a tennis court.
GSIS President and General Manager Jesus Clint O. Aranas had said these two lots were not included in the 25-year lease contract until 2041 signed on June 24, 2016 between the GSIS and PPHI for lots 30-A and 30-B, where Sofitel stands.
Even in the previous contracts between 1991 and 2016, lots 19 and 41 were not included in the premises leased by PPHI, Aranas had said.
“We already lost on rentals. It is of primordial importance that contracting parties are clear on the terms of the contract,” Aranas told the Inquirer this week.
“We are duty bound to protect the funds of our members. We cannot turn a blind eye on such things short of dereliction of our duty,” Aranas added.
In a May 4 position paper addressed to Aranas, a copy of which was obtained by the Inquirer, PPHI president Esteban G. Peña Sy insisted that the company was “not illegally occupying lots 19 and 41.”
“The original contract of lease, the amended contract of lease and the renewal of the amended contract of lease all contain provisions allowing PPHI to use these two lots to house the hotel facilities and equipment for carrying out the hotel operations,” it said, referring to the agreements entered into by the two parties since 1990.
Also, the company said that “it is not true that PPHI has been occupying lots 19 and 41 without paying any compensation to GSIS.”
“These two additional lots constitute a vital part of hotel operations, and PPHI is paying the GSIS a rental equivalent to 5 percent of the GOR [gross operating revenue] of the hotel. Therefore, 5 percent of any revenue generated from these two lots has been, and is being, included in the monthly rental paid to GSIS,” it claimed.
PPHI also stood firm that it “does not owe GSIS any back rentals.”
“All the lease contracts (the original contract of lease of 1990, the amended contract of lease of 1991, and the renewal of the amended contract of lease of 2016) do not require a separate rental payment for lots 19 and 41. To reiterate, all revenue generated from these two lots is incorporated in the GOR of the hotel, 5 percent of which is paid to GSIS as monthly rental,” PPHI said.
“PPHI has been religiously abiding by the provisions of the agreements, including the existing contact, including the timely payment of monthly rental. There is, therefore, no reason to ask PPHI to vacate lots 19 and 41,” it added.
“As a matter of record, PPHI has remitted to GSIS the amount of P109.23 million as rental payments in the year 2017, which is more than three times the minimum annual rental of P33.27 million for the said year,” it said.
“Moreover, for the first quarter of 2018 alone, PPHI has already paid GSIS a rental of P27.678 million, which is more than 80 percent of the whole year’s guaranteed rental. It is believed that PPHI has been paying GSIS a rental which may well exceed the rate of return of all the other GSIS properties leased to the private sector,” according to the company.
Effects of eviction
PPHI also claimed that “the adverse effects of ejecting PPHI from the premises far outweigh any perceived benefits to GSIS.”
PPHI said that “there is a misconception that GSIS will be generating more income by getting back lots 19 and 41 and leasing them out separately.”
“GSIS still has quite a few pieces of properties nearby which are not yet leased out. Whether GSIS can lease out lots 19 and 41 for commercial development and how much income can be generated is still uncertain,” PPHI said.
The current market value of lot 19 is P384 million, while lot 41 is valued P362.7 million, an earlier GSIS fact sheet showed.
Relocation
“Under the existing lease contract, GSIS must shoulder the relocation costs of the hotel facilities and equipment, which can amount to no less than P50 million,” PPHI said.
“In order to relocate the facilities and equipment, PPHI may have to shut down hotel operations for six to eight months, and may not be able to maximize profits, thereby decreasing the rent to be paid to GSIS; GSIS will lose an income of around P80 million,” PPHI added.
“The relocation of the facilities and equipment will no doubt affect the operations of the hotel and as a consequence, less operating revenue may be generated, which will, throughout the remaining term, affect the monthly rental income of GSIS to a great extent,” it said.
“After 23 years, the hotel will become a property of GSIS. GSIS should really think it over whether it wants to get a hotel in world-class standard or a hotel with aircon cooling towers located right in the middle of its parking area,” it added.