Appointments spoil Subic’s high marks

A month ago, chairman Felicito Payumo of the Subic Bay Freeport was in high spirits. He had just collated the performance figures for the previous year showing everything was up in his turf, except for internal revenue collections. In a Jan. 6 report to President Gloria Arroyo, Payumo glowed that investments grew 51 percent, with 180 new factories plunking in P2.535 billion in 2002, compared to 2001’s 142 firms with P1.682 billion. With several factories starting up immediately, employment rose seven percent to 48,874 direct hires, not including new jobs from their suppliers. Exports soared 21 percent too, from $1.081 billion in 2001 to $1.307 billion in 2002. Tourism, Subic’s bread and butter, rose 15 percent, with mostly domestic travellers swelling to 7.972 million from 2001’s 6.934 million. Customs collections grew by nine percent to P3.986 billion. The only sour note, if one would call it that, was income taxes dipping 15 percent from P748 million in 2001 to P635 million in 2002. And that was because the BIR moved to its Manila central office jurisdiction over Subic’s large taxpayers. Payumo thus had every reason to crow.

One month later Payumo is singing a sad note to Malacañang. In a Feb. 6 memo to Executive Secretary Alberto Romulo, he pointed to a glaring mistake in the appointment of two new directors to the free port’s 15-man governing board when there was no vacancy. On record, he noted that the present directors have six-year terms fixed by law, so new appointees Ednalino Cajudo and Jaime Mendoza had no seats to take. Off record, he worried about partisan politics spoiling his fresh accomplishments. Thus, Payumo told Romulo, he could not notify the new appointees, as ordered, to take office until the legal kinks were ironed out.

Cajudo, it turns out, is the husband of nearby Olongapo City’s vice mayor Cynthia Cajudo. A protégé of Tourism Secretary Richard Gordon and wife Olongapo mayor Kate Gordon, Cajudo’s entry to the Subic board was apparently a political concession. Payumo and the Gordons have been at odds ever since he was congressman of adjacent Bataan, and Richard was Subic chairman while Kate was Olongapo congresswoman. A high point in their rivalry was when residents of Morong, Bataan, rallied for the opening of Subic’s gate to their town, which then-chairman Richard vehemently opposed. Payumo soon succeeded Gordon in 1999 as Subic chief. The Gordons’ supporters in turn rallied in protest, and forcibly took over the facilities for days. Since then, it has been an on-and-off battle for turf. Olongapo folk frequently would picket at Subic gates for perceived restrictions in their movements to jobs inside the free port. Weeks ago the Gordons’ men again demonstrated for the sacking of Mamerto Malabate from the Subic board. Malabate, a former Olongapo councilor, was the Gordon-led city council’s nominee only months back. For some reason, the council wants the appointment revoked, and for good measure declared Malabate persona non grata. Cajudo, Payumo suspects, is the new Gordon choice to which Malacañang relented. Sources at Subic say Cajudo’s vice mayor-wife is facing graft charges before the Sandiganbayan for the questioned transfer to Olongapo of P39 million worth of free port property without the Subic board’s approval.

Subic middle managers find Mendoza more worrisome. They say he is not just another Gordon favorite, but also the organizer in a plush Subic hotel of a labor union affiliated with the militant Kilusang Mayo Uno. Payumo declines to comment on this, apart from saying that "Taiwanese and Japanese investors here are allergic to even moderate unions, what more radical ones." Sources say former senator Ernesto Herrera, head of the moderate Trade Union Congress of the Philippines, had protested Malacañang’s appointment of Mendoza, but apparently was unheeded.

Romulo has yet to reply to Payumo’s frantic note. But Palace insiders say the imbroglio over Subic appointments has long been festering. In 2001 directors Nicasio Leonzon and Constancia Macomb resigned their posts to give way to possible choices of Mrs. Arroyo. The seats remained vacant for months, until Malacañang named Antonio Chan and Mario Garcia on Mar. 13, 2002. Even back then, Payumo found the appoinments strange, for Chan and Garcia were designated as replacements for unresigned directors Jose Luis Vera and Gaudencio Mendoza (not related to Jaime). A bar topnotcher, Mendoza disputed the Malacañang papers, citing Subic’s charter on fixed terms for board members. The board wrote to Malacañang about it on Mar. 26 and May 6, 2002. Days later Mrs. Arroyo inaugurated a new computer plant in the free port. Chan and Garcia took the opportunity to clear up matters with her; that is, that they were replacing the resigned Leonzon and Macomb, respectively, not Vera and Mendoza. The President nodded, so Payumo, with Chan and Garcia signing, reported the accord to Malacañang paper pushers on May 17.

Malacañang did not reply to the three letters. The directors took it to mean that everything was settled. To their surprise, a letter from Romulo came on Jan. 29, 2003, designating Cajudo and Jaime Mondoza as replacements for the long-resigned and replaced Leonzon and Macomb. Meaning, Vera and Gaudencio Mendoza are again being pushed out. So Payumo can only wonder for what reason.

Meanwhile, auctioneers of imported used cars and trucks at Subic are rejoicing. The Olongapo regional trial court stopped the Department of Finance and the Land Transportation Office last week from enforcing an executive order that could dampen buyer enthusiasm for cheap vehicles.

Allegedly on the prodding of car assemblers, Mrs. Arroyo had issued EO 142 in Nov. directing the LTO to not register or renew the papers of used cars, pickups, dump trucks and ambulances bought from Subic since 2000 unless the owners show clearance certificates from Customs and BIR. This, supposedly because of unverified reports of smuggling.

The auctioneers and several buyers complained in court that the EO is unconstitutional, being an ex post factor rule. Besides, they said, the EO violates the presumption of forthright business dealings, since Customs, BIR and LTO officials are present in the arrival of the used vehicles at the free port, the roadworthiness and emission tests, and the auctions.

Having granted a preliminary injunction on the EO, the court will now hear arguments of the government and auctioneers for and against a permanent injunction. Last weekend, thousands of buyers flocked to Subic to bid for light construction equipment and commercial vehicles.

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