Ombudsman drops graft case vs ex-SBMA chief Payumo

MANILA, Philippines - The Office of the Ombudsman yesterday dismissed a graft case filed against former Subic Bay Metropolitan Authority (SBMA) Chairman Felicito Payumo for lack of probable cause.

Records showed that the charges stemmed from a complaint filed against Payumo for allegedly entering into a contract with the Subic Coastal Development Corp. (SCDC) that was grossly disadvantageous to the government.

The complainant alleged that a 16.5-hectare beachfront property within the Subic Bay Freeport Zone was leased to the SCDC for only P2.75 per square meter, at an escalation clause of six percent per annum.  

The same contract was amended and SCDC was further granted a rent-free period of five months. The complainant also alleged that other adjoining lots with the same qualities as that rented out to SCDC were leased at higher prices and escalation rates. 

Moreover, the property leased to SCDC was allegedly further subleased at dramatically higher rates considering that the lot is prime property that could even be valued in dollars and is worth more than P2.75 per square meter.

In defense, Payumo claimed that the property prior to its lease to SCDC was empty and unusable; the roads were swamp and there were no sidewalks; the water was not suitable for swimming; the beachfront was unsightly; the drainage was poor; and there were no utilities. 

Payumo attached photographs showing the condition of the property prior to SCDC’s occupancy to prove his claim. 

The same property was offered, through SBMA’s marketing, to other potential investors but it was only SCDC which committed to develop the idle lot and invest P1 billion to improve the place. 

Moreover, while the other property mentioned in the complaint has lower rentals, Payumo’s camp argued that it was because they were straight leases with fixed amount of rent, while with SCDC, SBMA is given an additional 10 percent share in gross revenues and sublease contractual rentals.

The Office of the Ombudsman, in a Resolution, sustained the respondent’s argument that the contract is not at all grossly and manifestly prejudicial to the government.

The ruling said “we find no sufficient basis to recommend the prosecution of respondent Payumo for violation of Republic Act 3019 Section 3 (g) thereof because the evidence adduced failed to prove the essential elements of the offense charged.”