BIZ BUZZ: Divisoria standoff

Tensions are high in Divisoria as vendors face off with the maintenance and security personnel of Festina Holdings, the group that bought the property from the City of Manila in early 2020 as the city was raising money for its COVID-19 intervention.

This was as representatives of the Divisoria Public Market Credit Cooperative filed a graft complaint at the Office of the Ombudsman against Manila Mayor and presidential candidate Francisco “Isko Moreno” Domagoso and five other top officials for the sale of the valuable property.

The transfer of Divisoria to private hands actually started long before Moreno’s term. In 1992, the late Manila Mayor Gemiliano Lopez signed a 50-year agreement with Linkworld Construction and Development Corp. for the development of a wet and dry market and a four-story mall on the 8,000 square meter (sq m) lot bounded by Commercio, Tabora, M. De Santos and Sto. Cristo streets.

The agreement was for the local government to run the wet and dry section, and the developer will run the mall on top of the market. Rental of the property was pegged at P20 per sq m, increasing by 10 percent every three years, translating to P160,000 a month or P1.92 million per year.

The land lease, which was originally executed in 1992, will expire in March 2046.

The Divisoria Mall burned to the ground in 2013, then rebuilt by Festina Holdings and Linkworld in 2016. Festina owned the building, while lot ownership remained with the city.

The city decided to sell the property in 2020 to help raise funds to address the pandemic. The property was appraised at P1.374 billion, while the rental income was only P377,280 per month or P4.527 million a year.

Following the bidding that took place on Oct. 6, 2020, Manila sold the property to Festina at about P190,000 per sq m versus the floor price of P165,000 per sq m.

The city government, for its part, was supposed to have relocated the vendors to another site, along Pritil, by 2021. Because of the delay in relocation and given Moreno’s aspiration to be the next CEO of the land, it has inevitably become an election issue.

—Doris Dumlao-Abadilla

Inheriting the headache

There are about 890 stalls in Divisoria Market. Based on the original agreements, the leasing rights could not be assigned, transferred or conveyed to any other persons or entities except those related to the awardees (spouse, children and parents) but only in case of total physical incapability or in case of death.

“In practice, however, many of the awardees illegally sold their rights to third parties. Over the years, the city tolerated the practice. This is common in almost all public markets,” an industry source privy to Festina’s affairs lamented.

Out of the original 890 stalls, the source estimated that less than 200 were occupied by the original awardees, while about 120 stalls were deemed abandoned.

“The rest are being occupied by nonawardees who pay rent to the slumlords that acquired rights from the original awardees,” the source said.

It was claimed that these slumlords were the ones milking indigents and offering protection to illegal sidewalk vendors within the market and outside the four perimeters of the Divisoria Mall.

“Their victims can deal directly with Festina at half the cost of leasing from the slumlords,” the source said.

We heard that the vendors were initially given until the end of April to sign up directly with Festina, but the deadline has been extended to mid-May. The new landlord has informed the vendors they could stay for at least one year, although it’s not cast in stone as it’s uncertain when the new area promised by the city government in Pritil would be ready.

The source says Festina understood the vendors’ predicament and would never want to be harsh or confrontational.

For now it seems that the issue will be up to the next Manila mayor to resolve.

—Doris Dumlao-Abadilla

Ayala board moves

The Zobel family’s Ayala Corp. welcomed two directors to its board: former Finance Secretary Cesar Purisima and former Singapore Telecommunications Group CEO Chua Sock Koong. They were elected to replace outgoing directors Keiichi Matsunaga and Antonio Jose Periquet.

Purisima, who also occupies board seats at Ayala Land Inc. and Bank of the Philippine Islands, was the finance chief under the previous Aquino administration who steered the Philippines toward its first investment grade rating.

Chua is a senior advisor at Singtel, the strategic partner at the company’s telecommunications arm, Globe Telecom. She is also the deputy chair of Singapore’s Public Service Commission and a member of the Council of Presidential Advisers and the Research, Innovation and Enterprise Council.

Ayala chair Jaime Augusto Zobel de Ayala thanked Matsunaga and Periquet for their years of valuable advice while beaming at the entry of Purisima and Chua, who he said would “provide immense value and complement the existing expertise and strengths of our current directors.”

Ayala was proud to point out its board now has two female directors, Chua and Rizalina Mantaring, the former CEO of Sun Life Philippines, while expressing its desire to see more women board members.

—Miguel R. Camus INQ

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